KAMA Confluence Engine

KAMA Confluence Engine

A moving average reacts to a real move and to random noise in the same way. KAMA adapts instead: it follows price closely when the market moves efficiently and slows down when the market moves sideways. In this version the Efficiency Ratio is also weighted by tick volume, so a move with volume behind it is followed faster than a move without it.

What you see on the chart

The ribbon. Green when the trend is up, red when it is down, gray when there is no clear trend. The candles take the same color, so the state of the market is visible at a glance.

The signal. When the ribbon changes color, a triangle marks the candle where the trend turned. That candle is the entry.

The trade levels. The Stop Loss is placed behind the last swing high (for a sell) or the last swing low (for a buy). Take Profit 1, 2 and 3 are set at one, two and three times that risk. Each level is labeled with its price and its distance in pips. The risk area and the reward area are shaded, so you see the size of the trade before you open it.

The panels

Multi-timeframe panel. The direction of the ribbon on M15, H1, H4 and D1, the volume status on each timeframe and its Efficiency Ratio. The header shows how many of the four timeframes agree, for example "Bearish 4/4".

Confidence. A score from 0 to 100 percent for the current timeframe, combining the Efficiency Ratio, volume and the agreement of the four timeframes. It is shown as a number and as a bar.

Efficiency filter. The Kaufman Efficiency Ratio of a leading timeframe (H1 by default) tells whether the market is trending or noisy. Below the minimum you set, signals are blocked. A warning appears when the ratio on H4 or D1 starts to fall.

Entry timeframes. The lower timeframes where the same direction currently has confidence above your threshold and the last signal has not yet reached Take Profit 3. Click a row to switch the chart to that timeframe.

Pairs scan. All symbols in your Market Watch, filtered by confidence and by the efficiency filter and sorted by confidence. Click a pair to open it on the chart.

The panels scale with your screen settings. The chart is shifted to the left so the panels do not cover the candles.

How to use it, step by step

Step 1. Choose the pair. Open the pairs scan and pick a pair near the top of the list.

Step 2. Check the direction. In the multi-timeframe panel, look for at least three of the four timeframes pointing the same way. If they disagree, wait.

Step 3. Choose the entry timeframe. Use one of the timeframes listed under Entry timeframes.

Step 4. Enter on the triangle. Sell when the ribbon turns red, buy when it turns green, with confidence above your minimum.

Step 5. Manage the trade with the drawn levels. For example, take part of the position at Take Profit 1, move the stop and let the rest run to Take Profit 2 and 3. Close the trade if the ribbon turns against you.

Alerts

Alerts for filtered signals (popup, sound, push notification, e-mail) and a separate alert when the ribbon changes color. All alerts are off by default. Turn on only the ones you need.

Main settings

• KAMA: Efficiency Ratio period, fast and slow periods, applied price, smoothing.
• Volume: volume weighting and its strength, thresholds for high and low volume.
• Timeframes: the four timeframes of the panel, the leading timeframe of the efficiency filter and its minimum.
• Signals: minimum confidence, volume and multi-timeframe confirmation.
• Trade levels: bars used to find the last swing, the stop buffer, the risk-to-reward multiples of the three targets, shaded zones on or off, colors.
• Appearance: ribbon and glow width, candle coloring, panel position.

Notes

• The indicator does not open, change or close trades. It works on any symbol and timeframe.
• Signals and alerts are evaluated on closed bars. The ribbon on the current, unfinished bar can still change until the bar closes.
• To use the pairs scan, add the symbols you want to scan to Market Watch so that the terminal can load their history.