KAMA: Kaufman Adaptive Moving Average Explained

Every moving average forces the same compromise: fast ones whipsaw in ranges, slow ones lag in trends. Perry Kaufman's KAMA (Kaufman Adaptive Moving Average) refuses the compromise — it changes its own speed based on how efficiently price is moving.

How KAMA Works

KAMA computes an efficiency ratio: net price change over the period divided by the sum of all the bar-to-bar movement it took to get there.

• Trending market: price travels in a straight line → high efficiency → KAMA speeds up toward its fast setting (default 2).
• Choppy market: price churns without going anywhere → low efficiency → KAMA slows toward its slow setting (default 30) and simply flattens.

The visual signature is unmistakable: KAMA hugs trends closely, then goes nearly horizontal in chop instead of weaving through it.

How to Trade It

1. Price cross. Long when price closes above KAMA, exit below — the adaptive speed means far fewer range whipsaws than the same rule on an EMA.

2. KAMA slope. Only trade when KAMA is actually sloping; a flat KAMA is the range filter, no extra indicator needed.

3. Fast/slow KAMA pair. Two KAMAs (e.g. 10 and 21) crossing gives an adaptive version of the classic MA crossover.

Building It in Setup.Cash

Add KAMA in the strategy builder with its period, fast, and slow parameters, and condition on price crossing it or on its direction. See our moving averages guide for how it compares to SMA/EMA/WMA foundations.

Tuning

• 10 / 2 / 30: Kaufman's classic.
• Longer period (21+): smoother efficiency measurement — steadier regime detection.
• The extended library offers relatives: VIDYA (volatility-indexed), McGinley Dynamic, JMA, and Zero Lag MA — each a different answer to the lag-vs-noise problem.

Adaptive averages shine exactly where fixed ones fail. Backtest KAMA against an EMA of the same length on your market and compare drawdowns in ranging months.