KAMA - Kaufman Adaptive MA

What is KAMA?

Perry Kaufman's Adaptive Moving Average automatically becomes faster in trending markets and slower in ranging markets using an Efficiency Ratio.

• High efficiency: Strong trend → fast MA (follows closely)
• Low efficiency: Choppy market → slow MA (filters noise)

Advantages

• Reduces whipsaws in ranging markets
• Quick response in trending markets
• No need to manually adjust periods
• Self-adapting to market conditions

Trading

• KAMA slope indicates trend direction
• Flat KAMA = ranging market (avoid trend trades)
• Price crossing KAMA = potential signal