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 Investor/RT Tour ( more on Technical Indicators )
Adaptive Moving Average
The Formula . . . 

. . .more on Formulas 
Direction = Price - price(n)  ; where n = AMA Period
Volatility = Sum(abs(price - price[1], n)
Effeciency Ratio (ER) = Direction / Volatility
Fast Smoothing Constant (FastC) = 2/(p + 1)  ; where p = FSC Period
Slow Smoothing Constant (SlowC) = 2/(q + 1)  ; where q = FSC Period
Scaled Smoothing Constant (SSC) = ER(FastC - SlowC) + SlowC
c = SSC*SSC
AMA = AMA[1] + c(price - AMA[1]) 

See Also:  S&C, 1998 Bonus Issue, p. 34.
 
The Presentation . . . 

. . . more on Charts 

Adaptive Moving Average

Above is a One Minute Bar Chart of Intel(INTC).  The Adaptive Moving Average is seen as a red line in the chart.  This moving average uses the preferences seen below.
 
The Preferences . . . 

. . . more on Preferences 

Adaptive Moving Average Preferences

  • AMA Period - Period used to calculate the Direction as seen in the formula above. (10 is recommended)

  • Fast SC Period - Period used to calculate the fast smoothing constant (2 is recommended)

  • Slow SC Period - Period used to calculate the slow smoothing constant (30 is recommended)

  • AMA Color - Color of the AMA line in the chart.
 
The Description . . .
This moving average moves slowly when prices are moving sideways and moves swiftly when prices move swiftly.  The basic rule is to buy when the AMA turns up, and sell when the AMA turns down.