Combining Adaptive and Kaufman Moving Averages to Reduce Whipsaws

Summary

The document introduces an adaptive moving average (AMA) based on Kaufman’s KAMA. The described update incorporates where the closing price sits within the high–low range, adding price-location information to the adaptive calculation. It also outlines a trading system that combines the AMA with KAMA.

The proposed rationale is that using both averages may reduce whipsaws compared with relying on either one alone. The note also mentions using changes in the indicator’s color as signals and states that those changes do not repaint. It supplies no formulas, parameter choices, chart examples, or performance tests, so the potential reduction in false signals is a claim to investigate rather than demonstrated evidence.

Key ideas

• The AMA modifies a KAMA-based approach by accounting for the close’s location within the high–low range.
• A proposed system combines the AMA and KAMA to seek fewer whipsaws than either average alone.
• Color changes are presented as signals, and the document says they do not repaint.
• The note gives no empirical results or implementation parameters to assess the system’s performance.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.