GlossaryAdvanced
Kaufman's Adaptive Moving Average (KAMA)
A moving average that automatically speeds up during trending markets and slows down during choppy, directionless ones.
Kaufman's Adaptive Moving Average (KAMA), developed by Perry Kaufman, dynamically adjusts its own smoothing constant based on a calculated "efficiency ratio" that compares net price movement to total price movement over a given window.
When the efficiency ratio is high (price is moving efficiently in one direction, indicating a clear trend), KAMA speeds up and tracks price more closely; when the ratio is low (price is choppy and directionless), KAMA slows down, reducing whipsaw signals during a ranging market. See Kaavon's dedicated KAMA article for the full calculation.
Examples
- KAMA tracks price closely during a strong, efficient trend, then automatically flattens out and lags more during a choppy, directionless period.
- KAMA's efficiency-ratio-based adaptation is what distinguishes it from a fixed-length moving average, which applies the same smoothing regardless of current market conditions.