KAMA: Kaufman Adaptive Moving Average x2/Log

The KAMA: Kaufman Adaptive Moving Average x2/Log indicator provides a dual-line adaptive smoothing system designed to minimize noise and account for market volatility by adjusting its sensitivity based on price efficiency.

Usage

The Usage section focuses on identifying trend direction and momentum shifts using two independent Kaufman Adaptive Moving Averages. Users can identify bullish trends when the shorter-period KAMA crosses above the longer-period KAMA, and bearish trends when it crosses below.

A key feature of this tool is the "Log" setting, which applies a geometric mean calculation. This is particularly useful for volatile assets like cryptocurrencies or new stocks, as it stabilizes the moving average's reaction to exponential price movements. The indicator also supports multi-timeframe analysis via the "Resolution" setting, allowing users to plot higher timeframe KAMA values on a lower timeframe chart for trend confirmation.

Details

The Kaufman Adaptive Moving Average (KAMA) functions by calculating an Efficiency Ratio (ER), which represents the ratio of price change over a period to the sum of absolute price changes (volatility).

Unlike standard implementations, this script:

• Initializes at Bar Zero: The calculation begins at the very first available bar, ensuring that the moving average weighting remains accurate for new tickers or assets with limited history.
• Alpha Calculation: The smoothing constants are derived from "Fast" and "Slow" integers using the formula $2 / (n + 1)$, simplifying the input process for the user.
• Dual-Line Logic: It provides two KAMA lines that can either share smoothing parameters or use independent fast/slow alpha settings for more complex crossover strategies.

Settings

• Length 1: The lookback period used to calculate the Efficiency Ratio for the first KAMA line.
• Length 2: The lookback period used to calculate the Efficiency Ratio for the second KAMA line.
• Fast Alpha: The smoothing constant for the fastest possible market state (default is 2).
• Slow Alpha: The smoothing constant for the slowest, trendless market state (default is 30).
• Use The Same Fast/Slow Alpha For Both: When enabled, both KAMA lines use the primary Fast/Slow Alpha inputs.
• Fast/Slow Alpha 2: Independent smoothing constants for the second KAMA line (active only if the "Same Alpha" toggle is disabled).
• Log: When enabled, the indicator calculates the KAMA using logarithmic price data and then returns the exponential result to the chart.
• Source: The price data point used for calculation (e.g., Close, HL2).
• Resolution: The timeframe from which the KAMA data is requested.
• Background Color For Crosses: Toggles visual background highlights when the two KAMA lines cross.

FAQ

How do I interpret the Efficiency Ratio in KAMA? The Efficiency Ratio moves between 0 and 1. When the ratio is high (near 1), the market is trending efficiently, and KAMA becomes more sensitive (moving faster). When the ratio is low, the market is noisy, and KAMA becomes less sensitive (moving slower).

What is the benefit of the Log setting? The Log setting applies a geometric mean approach, which is ideal for assets that experience significant percentage gains or losses, as it prevents the moving average from being overly distorted by large nominal price gaps.

How can I access the KAMA: Kaufman Adaptive Moving Average x2/Log? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.