Heikin Ashi and KAMA Trend-Crossover Strategy

Summary

This strategy combines Heikin Ashi prices with Kaufman’s Adaptive Moving Average (KAMA) to create trend-following signals. The described approach compares a shifted, higher-timeframe HLC3 series with a smoothed KAMA series: a crossover signals a long entry, while a crossunder signals a short entry. The document also suggests using ADX to screen for trend strength and Bollinger Bands as a possible aid for setting stops.

The rationale is that Heikin Ashi smoothing may reduce short-term noise, while KAMA adjusts its responsiveness to changing market conditions. The published settings describe a BTC/USDT futures backtest over roughly a year, but provide no performance results or comparison, so they do not establish profitability. The source code also differs from the written description: its active calculations use HLC3 and KAMA-derived values rather than explicit Heikin Ashi candles, and the stated ADX filter is not implemented. Range-bound markets can still produce false signals, and KAMA may lag during sustained moves. Parameter stability across markets remains unshown.

Key ideas

• The written strategy uses a Heikin Ashi close and KAMA crossover to define long and short signals.
• KAMA adjusts its smoothing based on price movement and recent noise.
• ADX is suggested as a way to filter signals when trend strength is weak.
• The published code does not implement the described ADX filter or explicit Heikin Ashi calculation.
• The BTC/USDT futures test settings are given, but no performance evidence is reported.

Tags

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