The Adaptive Moving Average - (AMA) automatically adjusts to the level of volatility in a market

moving slower on sideways action and faster when the market is in a clear trend.

It is able to adapt two EMAs (slow and fast) thanks to an Efficiency Ratio that compares volatility
with trend direction. To calculate the AMA, we need the Efficiency Ratio (ER) and the Smoothing
Constant (SC).

Current AMA = Prior AMA + SC x (Price - Prior AMA)

The settings recommended by Perry Kaufman: AMA (10, 2, 30).

10 is the number of periods for the Efficiency Ratio (ER).
2 is the number of periods for the fastest EMA constant.
30 is the number of periods for the slowest EMA constant.

Smoothing Constant (SC)

The SC uses the smoothing factor [2/(1+N)] of the EMA in its formula.

SC = [ER x (fastest SC - slowest SC) + slowest SC]2

SC = [ER x (2 / (1+2) – 2 / (1+30)) + 2 / (1+30)]2
The Faster SC is for shorter EMA (2-periods). 2 / (1+2)
The Slower SC is for the longer EMA (30-periods). 2 / (1+30)
Note that the “2” at the end is to square the equation.

The Efficiency Ratio (ER)

ER = Change/Volatility
Number of periods x (user input)
Change = ABS (Close - Close (10 periods ago))
Volatility = Sum10 (ABS (Close - Prior Close))
Volatility is the sum of the absolute value of the last 10 price changes (Close - Prior
Close).
ABS stands for Absolute Value.
**Refer to the ER appendix for complete info and guideline.**

Since we need an initial value to start the calculation, the first AMA is just a simple moving
average.