Theory:
In this post, we’re diving into the world of Adaptive Moving Averages (AMAs) with insights from Vitali Apirine. He builds on Perry Kaufman’s original KAMA (Kaufman Adaptive Moving Average) technique, enhancing it to better respond to the price action by considering the close price in relation to the high-low range. The beauty of this method lies in its ability to reduce those pesky whipsaws that can trip you up when trading with standard moving averages alone.
One of the key improvements in this version is the double smoothing, designed to tackle the issue where the AMA can sometimes be too jumpy. By smoothing things out, the AMA not only becomes more stable but also reacts a bit quicker to market movements.
Usage:
Traders can leverage color changes in the adaptive moving average as trade signals. Here’s how it works:
By keeping an eye on these signals, you can make more informed trading decisions and potentially enhance your strategy's performance. Happy trading!
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