Adaptive Moving Average (AMA) with filter

In “Adaptive Moving Averages” in this issue, author Vitali Apirine introduces an adaptive moving average (AMA) technique based on Perry Kaufman’s KAMA (Kaufman adaptive moving average). His update to the original KAMA allows the new method to account for the location of the close relative to the high–low range. The author describes a trading system that combines the AMA and KAMA, suggesting that the combination may reduce the number of whipsaws relative to using either moving average by itself.

Know about this indicator

The Adaptive Moving Average is an innovative technical analysis tool that uses a moving average to smooth past data and detect short-term trends.

The indicator is coded exactly as it is described by Vitali Apirine (including the usage of high and low prices for adapting). But in order to make it easier to use it in a “classical way” (ie: using some sorts of signals that we can get from it), this version has additional filter to make the slope change color changes less frequent and thus to make false signals appear in fewer occasions

Usage :

It can be used as any regular moving average (or, for the users of KAMA – Perry Kaufman’s AMA, as a “faster” substitute of KAMA). Also, you can use the color change of this indicator as signal

The filter allows you to use the Candle Stick, Bullish, or Bearish developing trend signals as well. This simple yet powerful indicator can help you make better investment decisions by detecting potential market reversals before they happen.

To use this free MT5 indicator, first, create a custom buy or sell rule using the “Buy” or “Sell” button on the main toolbar. Next, add the following parameters to your rule:

  • Filter type – Adaptive Moving Average (AMACelebrated)
  • Period – 30 days
  • Length of the averaging window – 8 periods (just enter 8 in this field; it will automatically calculate the number of bars needed within that time period) You’re now ready to set up your AMA calculation!

To do so, select “Settings / Indicators / Price Action / ADEX // adaptive_moving_average”. The above screen will appear; click on the dropdown arrow next to “Length of the averaging window:” and choose “30.” Finally, under the Parameters tab click on Calculate button and wait for results!