KAMA Indicator MT4 MetaTrader for scalp in Forex Free Download

Introduction to KAMA Indicator

Most moving average lines are susceptible to false signals due to market noise, and due to the lag they cause, they may result in missed trading opportunities. The KAMA Indicator is an optimized moving average created by Perry Kaufman to create a moving average line that calculates market noise without allowing too much delay.

What is the KAMA Indicator?

Click here to download and install KAMA  Indicator

The Kaufman Adaptive Moving Average (KAMA) is a trend-following indicator that follows technical analysis indicators and is based on moving averages. It is actually a modified moving average that draws a line responding to directional price changes while also filtering or rejecting price spikes and market noise.
The KAMA Indicator draws a moving average line that fully covers price movements. This line is notably irregular, indicating its responsiveness to price fluctuations and changes.

Different Ways to Use the KAMA Indicator

There are various ways to use the KAMA Indicator. It can be used for buy signals, meaning when a candle crosses the KAMA line upwards, a buy signal is triggered. However, these cross signals should match the long-term trend because such signals may occasionally be false.
It can also be used by combining it with shorter-term moving averages to get trend reversal signals from crossovers.
Furthermore, it can be used as a momentum filter based on price movements.

How Does the KAMA Indicator Work?

Click here to download and install KAMA  Indicator

The KAMA Indicator has a unique formula that allows it to react appropriately to price changes while rejecting market noise. The following formula step-by-step shows how the KAMA Indicator identifies trend direction.

Efficiency Ratio (ER) = Change / Volatility Change = Absolute Value (Close – Close 10 periods ago)

Volatility = Sum of 10 Absolute Value (Close – Prior Close)
Volatility is essentially the sum of the absolute values of the last 10 price changes.
Smoothing Constant (SC) = [Efficiency Ratio x (fastest SC – slowest SC) + slowest SC] 2
SC = [ER x (2 / (2 + 1) – 2 / (30 + 1)) + 2 / (30 + 1)] 2

Where 30 is the period for the slow moving average, and 2 is the period for the fast moving average.

How to Use the KAMA Indicator on MT4

Click here to download and install KAMA  Indicator

The KAMA Indicator has several adjustable variables that traders can modify in its settings.

• “kama_period” refers to the number of periods used to calculate the efficiency ratio.
• “fast_ma_period” refers to the number of periods used for the fast EMA.
• “slow_ma_period” refers to the number of periods used for the slow EMA.

Buy Signal Using the KAMA Indicator

When to Enter a Buy Trade?
Whenever a candle crosses the KAMA line upwards, you can enter a buy trade, placing the stop-loss below the previous candle.
When to Exit a Buy Trade?
Exit the buy trade as soon as the candle crosses the KAMA line downwards.

Sell Signal Using the KAMA Indicator

Click here to download and install KAMA  Indicator

When to Enter a Sell Trade?
Whenever the candle crosses the KAMA line downwards, you can open a sell trade, placing the stop-loss above the previous candle.
When to Exit a Sell Trade?
Exit the sell trade as soon as the candle crosses the KAMA line upwards.

The KAMA Indicator can be helpful for detecting trend reversals in the market. However, it may generate false signals in volatile markets. It works best as a trend-following indicator when trades are filtered according to the KAMA trend direction.