Kaufman Adaptive Moving Average
KAMA · module 13 of 33 · trend
A moving average that speeds up in trends and slows down in noise, using an efficiency ratio.
- KAMA (10, 2, 30)
- ▲/▼ where the rule triggers
KAMA speeds up in clean trends and flattens in choppy ranges, so a flat KAMA is itself a warning.
How to apply it
- 1. Add it. Start with 10/2/30 on 15m (Intraday).
- 2. Read the market first. A high efficiency ratio makes KAMA track price closely, behaving like a fast EMA.
- 3. Adjust for ranges. A low efficiency ratio flattens KAMA, so it stops generating crossover signals in chop — its main advantage.
- 4. Manage the trade. Place the stop at 1.5 × ATR and the target at 3.5 × ATR, and only act when the chart above shows the trigger.
How it is calculated
ER = |Cₜ − Cₜ₋ₙ| ÷ Σ|Cᵢ − Cᵢ₋₁|; SC = (ER × (fast k − slow k) + slow k)²; KAMA = KAMAprev + SC × (C − KAMAprev).
Inputs
- · Efficiency period (10)
- · Fast EMA (2)
- · Slow EMA (30)
Reading it correctly
In a trend
A high efficiency ratio makes KAMA track price closely, behaving like a fast EMA.
In a range
A low efficiency ratio flattens KAMA, so it stops generating crossover signals in chop — its main advantage.
Settings by style
| Style | Suggested values |
|---|---|
| Intraday | 10/2/30 on 15m |
| Swing | 10/2/30 on 4h |
These are conventional starting points, not optimised values. Test any change on your own pair and timeframe before relying on it.
Worked example
Net move over 10 candles is 40 pips while the sum of absolute candle moves is 50 pips: ER = 0.8, a directional market, so SC is near the fast setting and KAMA hugs price. If the net move were 5 pips against the same 50 pips of travel, ER = 0.1 and KAMA would barely move.
When it failed
During a slow, steady drift the efficiency ratio stayed near 0.2 because each candle retraced part of the prior one. KAMA flattened and never confirmed a trend that ultimately ran 120 pips.
Limitations
- Three parameters instead of one, so more ways to overfit.
- Slow to respond when a trend starts from a very choppy base.
- Still a moving average — no predictive content.
Works well alongside
- · ADX / DMI
- · ATR
Redundant with
- · EMA
- · SMA
- · WMA
Stacking these produces agreement by construction, which is not confirmation.
Practice exercise
Plot KAMA(10,2,30) and EMA(20) on 15m EUR/USD. Count crossover signals for each over 300 candles and compare how many reached 1R.
Check your understanding
1. KAMA's efficiency ratio measures:
- · Volume per candle
- ✓ Net directional movement relative to total path travelled
- · Volatility in pips
- · Momentum divergence
ER near 1 means price moved directly; near 0 means it travelled a long path to go nowhere.
2. In choppy conditions KAMA:
- · Speeds up
- ✓ Flattens and produces fewer signals
- · Inverts
- · Requires volume
A low efficiency ratio shrinks the smoothing constant, so the average barely moves.