It whipsaws less in sideways markets, where fixed averages fail.
The short answer
- What is the adaptive moving average indicator (KAMA)?
- Adaptive moving average: speeds up in a trend and slows down in a sideways market, based on the efficiency ratio.
- When does KAMA get it wrong?
- Hard to calibrate. A wrong setting turns it into an ordinary average. See its current reading on the platform's symbols, at the latest daily close, in the 'Reading now' table on this page. See its reading now →
Reading now
| Ticker | Value | Five sessions ago | Status |
|---|---|---|---|
| SPY | 770.52 | 767.28 | Price is 1.0% above the line |
| QQQ | 740.52 | 737.52 | Price is 0.4% above the line |
| IWM | 283.23 | 284.29 | Price is 2.3% below the line |
| DIA | 519.52 | 519.94 | Price is 0.6% below the line |
A description of where the number sits against its thresholds. It is not an entry or exit signal.
Indicator limit
Hard to calibrate. A wrong setting turns it into an ordinary average.
Read it with
Average trend indicator: slows down in a sideways market, and ADX below 20 confirms the market really is sideways.
Answers: does the market have a trend?
What it actually does
The adaptive moving average changes its own speed. It calculates the efficiency ratio: how much of the price move was a clean trend and how much was back-and-forth. It then speeds up its smoothing when the trend is clean and slows down when the market is choppy.
Why the idea is strong
Because it tackles the core problem of every moving average: a fixed window is either fast and noisy in a range, or slow and late in a trend. Adaptation lets the tool pick its speed to fit the environment, instead of the user choosing in advance without knowing what environment is coming.
How it is read in practice
Read it like any average (position, slope and crossover), but its flat stretches carry information on their own: when it stays stubbornly flat, it is saying the efficiency ratio is low, meaning the market is chopping rather than trending. So the line itself becomes a classifier of the environment, not only a follower of price.
Hypothetical example
An asset spends a month in a range, then breaks out. During the range the line stays nearly flat and frozen, so it gives no false signals. As soon as the breakout starts, the efficiency ratio rises, the line speeds up and chases price quickly. Two different behaviors from one indicator, with no intervention.
Where it errs and why
Its complexity makes its behavior harder to predict, and its three parameters need calibrating on each asset. Its adaptation rests on the recent past, so it lags by a step at a sudden shift from a range to a trend.
Read it with
Don't read it alone. First classify the environment with the trend strength indicator to learn whether trend tools or range tools fit. Then confirm with volume, which separates supported moves from empty ones. Then place it on the structural levels from the gamma map, since a signal at a dense wall carries more weight than one in an empty price zone. This three-step order cuts the worst signals before they cost you anything.
Where to see it on the platform
The technical chart in the members area draws it on any symbol and timeframe you choose, and the scanner terminal shows its reading in the symbol card with the rest of its family.
