AMA_v3
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This technical indicator is designed to help traders visualize price trends and identify specific entry points by filtering out market "noise." It uses a sophisticated smoothed moving average (AMA) logic that dynamically adjusts based on the volatility of the market.
How it Works
The core logic of this tool revolves around three main components: trend smoothing, noise calculation, and signal identification.
1. Dynamic Smoothing and Noise Filtering Unlike standard moving averages that treat all price movements equally, this script evaluates the relationship between recent price changes and the overall "noise" (volatility) of the market. It calculates a specific ratio to determine how much of the current price movement is a meaningful trend versus random fluctuations. By analyzing the variance over a set period, the indicator can "smooth out" minor ripples in the chart, allowing the primary trend line to remain clearer.
2. The Adaptive Moving Average (AMA) The script generates a continuous line on your chart representing the smoothed price. It calculates this line by balancing the current price against its previous value using a weighted formula. This formula is sensitive to market velocity; if the market moves decisively in one direction, the line responds accordingly, but it maintains a level of stability to prevent erratic jumping during periods of consolidation.
3. Buy and Sell Signal Generation In addition to drawing the smooth trend line, the script acts as an automated alert system using two specific visual markers (arrows):
- Upward Signals: When the smoothed line moves upward significantly beyond a user-defined threshold, the script identifies this as a potential bullish momentum shift.
- Downward Signals: Conversely, when the line drops significantly below that same threshold, it marks a potential bearish momentum shift.
Summary for the Trader
The primary goal of this script is to provide a cleaner view of the market's direction. By filtering out minor price "chatter" and highlighting significant moves with visual arrows, it helps traders distinguish between temporary volatility and sustained momentum changes in the asset's price.
//+------------------------------------------------------------------+
//| AMA.mq4 |
//| Copyright © 2004, MetaQuotes Software Corp. |
//| http://www.metaquotes.net |
//+------------------------------------------------------------------+
#property copyright "Copyright © 2004, by konKop,wellx"
#property link "http://www.metaquotes.net"
#property indicator_chart_window
#property indicator_buffers 3
#property indicator_color1 Sienna
#property indicator_color2 Blue
#property indicator_color3 Red
//---- input parameters
extern int periodAMA = 9;
extern int nfast = 2;
extern int nslow = 30;
extern double G = 2.0;
extern double dK = 2.0;
//---- buffers
double kAMAbuffer[];
double kAMAupsig[];
double kAMAdownsig[];
//+------------------------------------------------------------------+
int cbars=0, prevbars=0, prevtime=0;
double slowSC,fastSC;
//+------------------------------------------------------------------+
//| Custom indicator initialization function |
//+------------------------------------------------------------------+
int init()
{
//---- indicators
SetIndexStyle(0, DRAW_LINE, 0, 2);
SetIndexStyle(1, DRAW_ARROW);
SetIndexArrow(1, 108);
SetIndexStyle(2, DRAW_ARROW);
SetIndexArrow(2, 108);
//SetIndexDrawBegin(0,nslow+nfast);
SetIndexBuffer(0, kAMAbuffer);
SetIndexBuffer(1, kAMAupsig);
SetIndexBuffer(2, kAMAdownsig);
//----
IndicatorDigits(4);
//slowSC=0.064516;
//fastSC=0.2;
//cbars=IndicatorCounted();
//----
return(0);
}
//+------------------------------------------------------------------+
//| Custom indicator deinitialization function |
//+------------------------------------------------------------------+
int deinit()
{
return(0);
}
//+------------------------------------------------------------------+
//| Custom indicator iteration function |
//+------------------------------------------------------------------+
int start()
{
int i, pos = 0;
double noise = 0.000000001, AMA, AMA0, signal, ER;
double dSC, ERSC, SSC, ddK;
//----
if(prevbars == Bars)
return(0);
//---- TODO: add your code here
slowSC = (2.0 / (nslow + 1));
fastSC = (2.0 /(nfast + 1));
cbars = IndicatorCounted();
if(Bars <= (periodAMA + 2))
return(0);
//---- check for possible errors
if(cbars < 0)
return(-1);
//---- last counted bar will be recounted
if(cbars > 0)
cbars--;
pos = Bars - periodAMA - 2;
AMA0 = Close[pos+1];
while(pos >= 0)
{
if(pos == Bars - periodAMA - 2)
AMA0 = Close[pos+1];
signal = MathAbs(Close[pos] - Close[pos+periodAMA]);
noise = 0.000000001;
for(i = 0; i < periodAMA; i++)
{
noise = noise + MathAbs(Close[pos+i] - Close[pos+i+1]);
}
ER = signal / noise;
dSC = (fastSC - slowSC);
ERSC = ER*dSC;
SSC = ERSC + slowSC;
AMA = AMA0 + (MathPow(SSC, G) * (Close[pos] - AMA0));
kAMAbuffer[pos] = AMA;
//----
ddK = (AMA - AMA0);
if((MathAbs(ddK)) > (dK*Point) && (ddK > 0))
kAMAupsig[pos] = AMA;
else
kAMAupsig[pos] = 0;
if((MathAbs(ddK)) > (dK*Point) && (ddK < 0))
kAMAdownsig[pos] = AMA;
else kAMAdownsig[pos] = 0;
AMA0 = AMA;
pos--;
}
//----
prevbars=Bars;
return(0);
}
//+------------------------------------------------------------------+
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