The Kaufman Adaptive Moving Average (KAMA) is a technical analysis tool that Perry Kaufman developed to smooth out price action in financial markets. It is a moving average that adjusts the weight given to each price in the period being considered based on the market's volatility: KAMA = Previous KAMA + Volatility Factor x (Price - Previous KAMA). The Volatility Factor is calculated based on the difference between the current and previous prices, with more significant differences resulting in a higher volatility factor and more minor differences resulting in a lower volatility factor. The volatility factor is also influenced by the considered period, with more extended periods resulting in a lower volatility factor.
