AMMA Indicator

Creator: Definedge

Default period: 50

The AMMA indicator is a combination of Moving average and adaptive moving average.

There is a difference in the nature of the moving average and the adaptive moving average. The adaptive moving average considers volatility as part of the moving average calculation.

It is often the case that price respects moving averages more and that helps with trailing stops-losses or sticking to the trend. Sometimes, an adaptive moving average works well and reduces the whipsaw effect. By plotting both, one can identify strong trends.

Price above AMMA cloud is a strong bullish trend and price below AMMA cloud is a strong bearish trend.

Prashant Shah introduced this concept in his book on Relative strength.

Click here to learn more about the indicator.

The indicator table value in TradePoint & RZone also provides you with a list of all values of this indicator for any group of stocks. This will allow you to compare the readings of this indicator across different stocks.

This indicator is also available in the System Builder of RZone & TradePoint for all charting methods. Using the system builder, you can develop various strategies based on the different conditions already present in this indicator. Additionally, it can be used with other indicators or price patterns to develop effective trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.

The indicator is applicable to all types of charting. Calculated based on the number of columns on P&F charts, bricks on Renko charts, lines on Line-break charts, candles on Heikin ashi charts, and lines on Kagi charts. While the formula and reading of the indicators remain the same, they become more dynamic on these charts.