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Adaptive Moving Average

Posted By: TradersLog

Perry Kaufman introduced the Adaptive Moving Average in his book Smarter Trading.

Kaufman’s indicator uses a ratio that compares price direction with the level of volatility.

This Adaptive Moving Average is designed to address the problem of choosing between a fast or slow moving average.  The speed of the Adaptive Moving Average automatically adapts itself to the level of market volatility.

The Adaptive Moving Average moves slower in a sideways market and faster in a trending market.

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