Fractal Adaptive Moving Average forex Indicator MT4 (FRAMA) is an adaptive moving average(MA) developed by John Ehlers. It remains flat during normal market conditions while taking significant moves according to price changes. It uses the fractal nature of forex markets to adjust its smoothing lookback period based on this fractal geometry. Always use this forex indicator use with other technical tools for trading.
Fractals are geometric or chart patterns that display the same characteristics as the more important curve when broken into parts in an ongoing feedback loop. This help breaks down important market trends into more predictable and profitable forex Reversal signals. A fractal chart pattern comprises five or more candles. It indicates the areas where market prices have struggled to move up or down.
The basic simple rules for spotting fractals are following:
An up fractal is a bearish turning point that occurs when an individual chart candle in any time frame is enclosed by at least two left chart bars and has similar lower highs to the right.
A down fractal indicates a bullish reversal where candles have two higher highs in either or both directions.
Calculations of Fractal Adaptive Moving Average Indicator?
The Fractal Adaptive Moving Average(MA) 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 Forex Indicator MT4
We can use various types of market analysis to calculate conventional moving averages(MA) in Fractal Adaptive Moving Average Indicator for MT4.
1. Price movement either above or below FRAMA indicates the change direction. However, forex traders should be aware that the straightforward cross-over forex strategy will likely create false signals, just like every other move average strategy.
3. Additionally, forex traders can combine the long-term FRAMA and a short-term FRAMA to build robust forex trading strategy. Long-term moving averages will define the general market trend. The traders can then enter trades in the trend with the Fractal Adaptive, a short version of the forex indicator.
Also, learn about the Simple TDI Breakout Trading Strategy
If price movements are a bit small, the Fractal Adaptive Moving Average forex Indicator for MT4 closely tracks the price. However, when price swings widen, FRAMA follows the price from another distance. The trend-following forex indicator can effectively find the forex market pivot points and cut all the hustle out of price fluctuations. The significant advantage of FRAMA over conventional moving averages(MA) is that it can move extremely slowly when markets are in a downward direction. Still, it swiftly shifts gears when prices begin to trend.