A moving average that retunes its own smoothing from the efficiency ratio: it reacts fast when a trend is running and goes nearly flat through choppy ranges. Perry Kaufman's way of letting one line switch between fast and slow on its own.
The Kaufman Adaptive Moving Average (KAMA) was systematized in the 1990s by American trader Perry Kaufman. Its core idea is a single one: measure whether the market is actually going somewhere or just shaking in place, and let that measurement retune the line's own smoothing.
An ordinary moving average is set once and then moves at the same speed forever. Set it fast and it gets whipped around by every range; set it slow and it falls behind every trend. A fixed period locks the behavior regardless of what the market is doing.
Kaufman's contribution was to remove that lock. When price is travelling in one direction, KAMA loosens its smoothing and reacts almost like an EMA. When price is merely going back and forth, it tightens its smoothing and barely moves at all. One line reads the character of the market and switches its own sensitivity. That is what "adaptive" means here.
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OANDA:USDJPY
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