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Adaptive Moving Average (AM A)
Info
The Adaptive Moving Average (AM A) is a Indicator for MetaTrader 5 that adaptive moving average (ama) is used for constructing a moving average with low sensitivity to price series noises and is characterized by the minimal lag for trend detection. This indicator was developed and described by Perry Kaufman in his book "Smarter Trading".
Usage
This tool is typically used for enhancing chart analysis and decision making.
Platform
This Indicator works exclusively on MetaTrader 5 (both build 600+ and newer versions).
Setup
Place the downloaded file in MQL5/Indicators folder via File ? Open Data Folder in MetaTrader 5.
How to Install and Use Adaptive Moving Average (AM A)
1. Installation: Place your file in the MQL/Indicators folder via "Open Data Folder" and restart your terminal.
2. Loading: Find the indicator in the Navigator, drag it onto your chart, and configure the input parameters in the popup window.
3. Customization: Press Ctrl+I to open the indicator list, select your tool, and click "Properties" to change colors, levels, or visual styles.
4. Updating: Replace the old file in the Indicators folder with the new version and restart the platform to apply changes.
Frequently Asked Questions
Q: Why is my indicator not showing? A: Verify the file is in the MQL/Indicators folder, or try right-clicking the "Indicators" tree in the Navigator and clicking "Refresh."
Q: Do custom indicators slow down the platform? A: Too many complex indicators can impact performance; remove unused ones via the "Indicator List" (Ctrl+I).
Q: Can I use MT4 indicators on MT5? A: No, MQL4 and MQL5 are distinct languages; ensure the indicator is compiled specifically for your platform version.
What this tool does
Adaptive Moving Average (AMA) is used for constructing a moving average with low sensitivity to price series noises and is characterized by the minimal lag for trend detection.
Typical Use Case
This Indicator excels in automated trading and technical analysis on MetaTrader 5.
Compatible Platform & Setup
This Indicator works on MetaTrader 5. Place the file in the MQL5/Indicators folder and restart the terminal.
Description & Settings
Related: Moving Averages, multi-timeframe [v03] - another powerful indicator for MetaTrader 5 traders.
Adaptive Moving Average (AMA) is used for constructing a moving average with low sensitivity to price series noises and is characterized by the minimal lag for trend detection.
Also recommended: XAN D E R Adaptive Cross - similar indicator with strong performance on MetaTrader 5.
This indicator was developed and described by Perry Kaufman in his book "Smarter Trading".One of disadvantages of different smoothing algorithms for price series is that accidental price leaps can result in the appearance of false trend signals. On the other hand, smoothing leads to the unavoidable lag in predicting the trends. This indicator was developed to overcome these two disadvantages.
Adaptive Moving Average Indicator
Calculation:
To define the current market state Kaufman introduced the notion of Efficiency Ratio (ER), which is calculated by the below formula:
ER(i) = Sinal(i)/Noise(i)
where:
ER(i) - current value of the Efficiency Ratio;
Signal(i) = ABS(Price(i) - Price(i - N)) - current signal value, absolute value of difference between the current price and price N period ago;
Noise(i) = Sum(ABS(Price(i) - Price(i-1)),N) - current noise value, sum of absolute values of the difference between the price of the current period and price of the previous period for N periods.
At a strong trend the Efficiency Ratio (ER) will tend to 1; if there is no directed movement, it will be a little more than 0.
The obtained value of ER is used in the exponential smoothing formula:
EMA(i) = Price(i) * SC + EMA(i-1) * (1 - SC)
where:
SC = 2/(n+1) - EMA smoothing constant, n - period of the exponential moving;
EMA(i-1) - previous value of EMA.
The smoothing ratio for the fast market mast be as for EMA with period 2 (fast SC = 2/(2+1) = 0.6667), and for the period of no trend EMA period must be equal to 30 (slow SC = 2/(30+1) = 0.06452). Thus the new changing smoothing constant is introduced (scaled smoothing constant) SSC:
SSC(i) = (ER(i) * ( fast SC - slow SC) + slow SC
or
SSC(i) = ER(i) * 0.60215 + 0.06425
For a more efficient influence of the obtained smoothing constant on the averaging period Kaufman recommends squaring it.
Final calculation formula:
AMA(i) = Price(i) * (SSC(i)^2) + AMA(i-1)*(1-SSC(i)^2)
or (after rearrangement):
AMA(i) = AMA(i-1) + (SSC(i)^2) * (Price(i) - AMA(i-1))
where:
AMA(i) - current value of AMA;
AMA(i-1) - previous value of AMA;
SSC(i) - current value of the scaled smoothing constant.
You may also like: Heiken Ashi On Adaptive Moving Average - excellent alternative for indicator users on MetaTrader 5.
⚠ Limitations & Risk Warning
- This tool is provided for educational and testing purposes only.
- Past performance does not guarantee future results.
- Trading involves substantial risk of loss. Use on a demo account first.
- Results may vary depending on market conditions, broker, and settings.
- We recommend thorough backtesting and forward testing before using with real funds.