Fractal Adaptive Moving Average Indicator MT4 (FRAMA) is an adaptive moving average developed by John Ehlers. It remains flat during normal conditions while taking significant moves according to the price changes. It uses the fractal nature of financial markets to dynamically adjust its smoothing lookback period based on this fractal geometry. Always use this indicator use with other technical tools for secure trading.
Fractals are geometric curves or patterns that display the same characteristics as the more significant curve when broken into parts in an ongoing feedback loop. These help to break down more significant market trends into more predictable and profitable Reversal signals. A fractal pattern comprises five or more candles. It indicates the areas where prices have struggled to move up or down.
The basic rules for spotting fractals are following:
A down fractal indicates bullish reversal where candles have two higher highs on either or both directions
Calculations of Fractal Adaptive Moving Average Indicator?
The Fractal Adaptive Moving Average is calculated using the algorithm for the exponential moving mean. The smoothing factor is determined by considering the dimensions of the fractal of the price range under consideration.
Trading with Fractal Adaptive Moving Average Indicator MT4
We can use various types of analysis to calculate conventional moving averages in Fractal Adaptive Moving Average Indicate for MT4.
1. Price movement either above or below FRAMA indicates the direction of change. However, traders should be aware that the straightforward cross-over strategy will likely create false signals, just like every other move average strategy.
3. Additionally, traders can combine the longer-term FRAMA and a short-term FRAMA to build a robust trading system. Long-term moving averages will define the general trend. The traders can then make trades in the trend with the Fractal Adaptive, a shorter version of the indicator.
Also, learn about the KDJ indicator
If price movements are small, the Fractal Adaptive Moving Average Indicator for MT4 closely tracks the price. However, when price swings become wider, FRAMA follows price from another distance. The trend-following indicator can effectively find the market pivot points and cut all the hustle out of price fluctuations. The significant advantage of FRAMA over conventional moving averages is that it can move extremely slow when markets are in a downward direction. Still, it swiftly shifts gears when prices begin to trend.
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