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In this post we will reveal how the FRAMA performs and if it is worthy of being included in your trading arsenal. It uses the Fractal Dimension of stock prices to dynamically adjust its smoothing period. The Fractal Adaptive Moving Average aka FRAMA is a particularly clever indicator. A nonlinear moving average is derived using the Hurst exponent. Mama.zip (4.69 KiB) Downloaded 524 times MAMA.pdf (51.79 KiB) Downloaded 747 timesįRAMA (FRactal Adaptive Moving Average).
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Thus, the two don’t cross unless a major change in market direction occurs, resulting in a moving average crossover system which is “virtually free of whipsaw trades”, according to Ehlers. The FAMA is synchronized in time with MAMA, but its vertical movement comes with a lag. FAMA (Following Adaptive Moving Average) is a result of MAMA being applied to the first MAMA line. When combined with FAMA, a Following Adaptive Moving Average, the crossovers form excellent entry and exit signals that are relative free of whipsaws.īasically the indicator looks like two Moving Averages (MA), but instead of curving around the price action, the MESA Adaptive MA moves in a staircase manner as the price ratchets. The nonlinear action of this filter is produced by the flyback of phase every half cycle. This method of adaptation features a fast and a slow moving average so that the composite moving average swiftly responds to price changes and holds the average value until the next bar’s close. MAMA is the mother of all Adaptive Moving Averages.Īctualy the name is an acronym for MESA Adaptive Moving Average.ĭeveloped by John Ehlers, the MESA Adaptive Moving Average is a technical trend-following indicator which, according to its creator, adapts to price movement “based on the rate change of phase as measured by the Hilbert Transform Discriminator”.