Created by Perry Kaufman, Kaufman’s Adaptive Moving Average (KAMA) is a moving average designed to minimize headfakes and to account for market noise or volatility.

Kaufman Moving Average Indicator

KAMA will adjust when the price swings widen and follow prices from a greater distance. This allows winners to run. KAMA will closely follow prices when the price swings are relatively small and the noise is low. As a trend comes to an end and prices consolidate, the moving average would move closer to the current market action and allow the trader to keep most of the gains captured during the trend.

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