MAMA


MAMA is the mother of all Adaptive Moving Averages.
Actualy the name is an acronym for MESA Adaptive Moving Average.

Developed by John Ehlers, the MESA Adaptive Moving Average is a technical trend-following indicator which, according to its creator, adapts to price movement “based on the rate change of phase as measured by the Hilbert Transform Discriminator”. This method of adaptation features a fast and a slow moving average so that the composite moving average swiftly responds to price changes and holds the average value until the next bar’s close.

The nonlinear action of this filter is produced by the flyback of phase every half cycle. When combined with FAMA, a Following Adaptive Moving Average, the crossovers form excellent entry and exit signals that are relative free of whipsaws.

Basically the indicator looks like two Moving Averages (MA), but instead of curving around the price action, the MESA Adaptive MA moves in a staircase manner as the price ratchets. It produces two outputs, MAMA and FAMA. FAMA (Following Adaptive Moving Average) is a result of MAMA being applied to the first MAMA line. The FAMA is synchronized in time with MAMA, but its vertical movement comes with a lag. Thus, the two don’t cross unless a major change in market direction occurs, resulting in a moving average crossover system which is “virtually free of whipsaw trades”, according to Ehlers.