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KAMA Reversal – VertexFX Indicator
KAMA Reversal (Kaufman's Adaptive Moving Average) indicator is unique VertexFX client side VTL indicator to detect market phases based on change in price and volatility. To calculate the KAMA Reversal, we first calculate the change between the current price and price KAMA_PERIOD bars ago. The sum of absolute change in prices over the KAMA_PERIOD is also calculated, which is termed as cumulative volatility. Using Kaufman's smoothing co-efficient, we smooth the cumulative volatility and derive the KAMA Reversal indicator.
BUY - Place Buy position when KAMA Reversal has bottomed out below zero and has started rising for at least two candles.
SELL - Place Sell position when KAMA Reversal has topped out above zero and has started falling for at least two candles.