This is kind of different and turned out somewhat better than expected. This is an adaptive efficiency ratio Regularized EMA.
About the efficiency ratio explained by Mladen Rakic:
Theory :
The Efficiency Ratio (ER) was invented by Perry Kaufman as a measure of volatility and as a way of making some calculations adaptive. In his adaptive moving average he uses 3 periods for calculation which makes it a bit "cryptic" and, by all means, not so simple to use. This version is simplifying the whole thing without an intention to clone the KAMA (Kaufman Adaptive Moving Average) indicator - but with an intention to use the efficiency ratio for adapting the average calculations and to use only two parameters for that :
- Period
- Price
- No other parameters needed
It can be used as any other moving average type indicator
Instead of an exponential moving average, this version is using the regularized ema.
PS: The standard EMA version for MT4 can be found here.
