The Fractal Adaptive Moving Average (FRAMA) Strategy is a dynamic trading approach that adapts to market volatility using the fractal dimension of price action. Originally developed by John Ehlers, FRAMA adjusts its sensitivity based on market conditions—smoothing out during consolidations and responding faster during trends.

This makes it a powerful tool for traders who want a balanced moving average that filters noise yet remains responsive during volatility. FRAMA is especially effective in trend-following, breakout, and pullback strategies across all major asset classes.

What Is FRAMA?

The Fractal Adaptive Moving Average (FRAMA) is based on the fractal nature of markets. It calculates a fractal dimension from price data and adapts the smoothing coefficient accordingly.

Key characteristics:

• Increases lag during choppy or sideways markets (to filter noise)
• Reduces lag during trending conditions (to stay close to price)
• Outperforms traditional MAs in both ranging and trending phases

Strategy Objective

• Use FRAMA to determine trend direction and strength
• Trade with the trend during momentum phases
• Avoid signals during flat, consolidating markets by observing how FRAMA flattens

Indicators Required

• FRAMA (period: 10–20)
• Optional: RSI or MACD for extra momentum confirmation
• Optional: Support/resistance or price action levels for structure

Step-by-Step Strategy Guide

Step 1: Determine Trend Bias Using FRAMA

• If price is above an upward-sloping FRAMA, the trend is bullish
• If price is below a downward-sloping FRAMA, the trend is bearish
• Flat or sideways FRAMA = no trade zone (choppy market)

Step 2: Wait for Price Pullback or Breakout

• In a bullish trend:
  • Wait for a pullback to the FRAMA line
  • Or wait for a breakout above a minor resistance level with FRAMA support
• In a bearish trend:
  • Wait for retracement to FRAMA or breakdown below support with FRAMA pressure

Step 3: Entry Confirmation

• Entry signals:
  • Rejection candle at FRAMA (e.g. pin bar or engulfing)
  • Momentum indicator (RSI > 50 or MACD histogram > 0 in uptrend)
  • Break of small range or consolidation near FRAMA

Step 4: Set Stop Loss and Take Profit

• Stop Loss:
  • Just below FRAMA line or recent swing low (bullish)
  • Just above FRAMA or recent swing high (bearish)
• Take Profit:
  • Use 2:1 reward-to-risk
  • Or target next structure/high/low
  • Optional trailing stop using dynamic FRAMA or ATR

Example: EUR/USD H1 FRAMA Pullback Buy

• FRAMA (10) slopes upward
• Price pulls back from 1.0920 to 1.0895, touches FRAMA
• Bullish engulfing candle + RSI above 55
• Entry: 1.0902
• SL: 1.0882
• TP: 1.0945
• R:R = 2.15:1

Alternative: FRAMA Crossover Strategy

• Use fast FRAMA (10) and slow FRAMA (25)
• Enter long when fast FRAMA crosses above slow FRAMA
• Confirm with RSI or MACD, or trade on candle confirmation
• Works well for swing trades and longer intraday setups

Best Market Conditions

• Trending markets with expanding volatility
• Consolidation breakouts
• Forex majors, indices (like NAS100), and gold
• Avoid low-volume or choppy markets

Advantages of the FRAMA Strategy

• Adapts to changing market volatility automatically
• Combines trend-following and noise filtering effectively
• Reduces false signals during ranges
• Excellent for both intraday and swing trading
• Can be combined with virtually any confirmation tool

Common Mistakes to Avoid

• Trading when FRAMA is flat—wait for directional slope
• Entering counter-trend setups without clear confirmation
• Using incorrect FRAMA periods (stick with 10–20 for responsiveness)
• Ignoring structure or price action around the FRAMA

Conclusion

The Fractal Adaptive MA Strategy offers a highly adaptable and intelligent way to trade changing market conditions. By dynamically adjusting to volatility, FRAMA provides clean trend direction, strong entry zones, and reduced noise—making it ideal for traders seeking both consistency and precision.

To master FRAMA and other advanced algorithmic tools, enrol in our expert-designed Trading Courses and build a strategy that adapts with the market—not against it.