TRAMA

Key Features of TRAMA

• Adaptive Calculation: TRAMA uses exponential averaging with a smoothing factor based on the squared simple moving average of highest highs and lowest lows, making it responsive to trend strength. Higher length settings produce smoother results, while lower values make it more reactive.

• Usage:

  • Trend Identification: Tracks price momentum and trend direction, moving closer to price during sustained trends for early entry signals in crossover systems.

  • Support/Resistance: Acts as a dynamic trailing support or resistance level, especially effective in trending markets.

  • Crossover Systems: Often used in systems like the Williams Alligator or with multiple TRAMAs (e.g., 5, 8, 13, 55, 233 periods) to generate buy/sell signals based on convergence-divergence relationships. For example, in the "Gabriels Trend Regularity Adaptive Moving Average Dragon" indicator, TRAMA lines (Lips, Teeth, Jaws, Wings, Tail) signal buying opportunities when the fastest line (Lips) crosses upward and selling when it crosses downward.

• Customization:

  • Length: Adjusts sensitivity (e.g., 100 for smoother results, lower for scalping).

  • Source: Typically uses closing prices but can be set to high/low for specific strategies like the Fibonacci HH LL TRAMA Band.

Tips from ATC

Backtest: Test 40-EMA (2-hour) vs. 50-EMA (4-hour) with TRAMA and RSI

Alerts: Set for 10-EMA crossing 40/50-EMA, price crossing TRAMA, and RSI 70/30.

2-Hour Chart: Use 40-period EMA for smoothing (slow EMA), paired with 10-period EMA for crossovers. RSI length = 10, TRAMA = 120. Buy 2–3 week options

4-Hour Chart: Use 50-period EMA for smoothing, paired with 10-period EMA. RSI length = 14, TRAMA = 120. Buy 3–4 week options

Strategy: Enter calls (puts) when price is above (below) upward (downward) TRAMA, RSI > 50 (< 50), and 10-EMA crosses above (below) 40/50-EMA. Exit at 50–100% profit, RSI 70/30, or TRAMA/EMA reversal.

Disclaimer: No Financial Crystal Ball Here, Just a Fancy Strategy Blueprint!