The Kaufman’s Adaptive Moving Average (KAMA) indicator for MetaTrader4 was developed by Perry Kaufman, to account for noise and volatility in the market. Kama will carefully align with prices even when price swings are somewhat small and the noise is low.
Kama will realign when price swings expands and trail prices from a greater distance. The KAMA indicator can be used to determine time turning points, spot overall trend and filter price movements.
Owing to the fact that the KAMA indicator is a trend following indicator, traders deploy it to function as such. When using the KAMA indicator, traders can deploy it in looking for price crosses, filtered alerts and directional changes.
Directional changes in price is represented by a cross above or below the KAMA indicator. A lot of alerts and whipsaws are generated when applying a simple crossover system, as seen on any moving average. Whipsaws can be eliminated by adopting a price or time filter to crossover.
A closer look at the KAMA indicator reveals that its calculation contains a very part called Efficiency Ratio. The ER reveals to us how massive price change was within the specified number of days. For instance, if the ER value equals 1, then it signifies that price in the calculation moved in the same direction all day – which signifies a strong trend. An ER value of 0 signifies the absence of trend.
In it also possible to trade the KAMA indicator in that following their close price and KAMA values crossings. If the close price is higher than the KAMA values, then we go long. If the close price is lower than the KAMA values, then we’re advised to go short.
MT4 Indicator Characteristics
Currency pairs: Any
Platform: Metatrader 4
Type: chart pattern indicator
Customization options: Variable (kama_period, fast_ma_period, slow_ma_period), Colors, width & Style.
Time frames: 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, 1-Day, 1-Week, 1-Month
Type: trend, resistance/support