Description
The Cong Adaptive Moving Average is a technical indicator designed to respond to price changes in volatile markets. Its calculation is similar to that of MovAvgAdaptive, however, the smoothing factor is defined as the ratio of price result to effort.
The smoothing factor is calculated as:
Result is obtained using one of the following processes (set with the mode parameter):
- As
maximum range, calculated as the difference between the highest high and lowest low in the lookup period. - As
price displacement, calculated as the absolute value of the difference between the current close and the first close in the lookup period.
Effort is the continuous price movement, calculated as the sum of each bar’s true range over the specified period.
The Cong Adaptive Moving Average is calculated as:
where:
CAMAis the current Cong Adaptive Moving Average.CAMA[1]is the previous Cong Adaptive Moving Average.- α is the smoothing factor.
Input Parameters
| Parameter | Description |
|---|---|
price
|
The type of price used in the calculations. |
length
|
The length of the period used in the calculations. |
mode
|
Defines whether to use maximum range or price displacement to calculate the smoothing factor.
|
Plots
| Plot | Description |
|---|---|
MovAvgAdaptive
|
The Cong Adaptative Moving Average plot. |
Further Reading
1. "Result Vs. Effort – An Adaptive Moving Average For Swing Trading" by Scott Cong, PhD. Technical Analysis of Stocks & Commodities, May 2023.
Example*
*For illustrative purposes only. Not a recommendation of a specific security or investment strategy.
Past performance is no guarantee of future performance.