ADAM Projection - Efficiency Ratio Adaptive)

Overview
The ADAM Projection is a visualization of how a price path might extend from its recent motion, expressed as a continuation (trend reflection) or anti-trend (mean reversion) pattern. This indicator expands upon Jim Sloman’s original ADAM projection—introduced in “The Adam Theory of Markets or What Matters Is Profit” (1983)—by adding a modern quantitative framework for Efficiency Ratio (ER) weighting, time-scaled path normalization, and smooth blending between continuation and anti-trend projections.

What Is the ADAM Theory?
Jim Sloman’s original ADAM projection was designed to model pure trend continuation. He proposed that every market motion could be mirrored around a central anchor price (the “Adam line”), effectively reflecting past price movements forward in time to visualize what a continuation of the same geometric path would look like. This reflection concept captured the idea that market structure exhibits self-similarity and that price trends often extend symmetrically beyond recent pivots.

How This Script Extends It
This version generalizes Sloman’s concept by introducing an adjustable blend between continuation (reflection) and anti-trend (forward paste) behavior, weighted by an adaptive ER domain.

Anchor Axis

The reflection axis (anchorPrice) can be Close, HL2, HLC3, or OHLC4.

The projection is drawn forward from this anchor for a user-defined horizon (len bars).

Dual Paths

Continuation (Reflection): Mirrors historical closes across the anchor.

Anti-trend (Forward Paste): Extends historical closes directly forward without inversion.

Efficiency Ratio (ER)
The Efficiency Ratio measures how directional recent price movement has been: ER = |Net Change| / Σ|Δi|
Values near +1 indicate strong directionality (favoring continuation); values near 0 indicate noise or consolidation (favoring anti-trend behavior).

Signed ER Normalization
ER values are mapped into a user-defined domain between erMin and erMax, with:

erSharp (γ) controlling the steepness of the blend curve

erFloor providing stability when ER ≈ 0

beta (β) weighting volatility across time (β = 0.5 approximates √time scaling)

Blended Projection
Each projected point is a weighted combination of the two paths: y_proj = (1 − w) * y_fade + w * y_cont
The blend factor w is derived from the normalized ER domain and gamma shaping, producing a smooth morph between the anti-trend and continuation geometries.

Visualization

The teal projection line shows the dynamically blended continuation/anti-trend forecast for the next len bars.

The gray anchor line marks the reflection axis.

Each segment adapts in real time based on ER magnitude and recent path structure.

Key Parameters
Core: len, anchorPrice, lineThin — projection horizon and appearance
Lines: showProj, colProj — show or recolor projection
ER Domain: erMin, erMax, erSharp, erFloor, beta — control domain scaling, shaping, and time weighting

Practical Use

High ER values emphasize continuation (trend-following behavior).

Low or negative ER values emphasize fading or mean reversion.

The projection helps visualize whether recent structure supports trend persistence or weakening.

Interpretation
The ADAM Projection is not a predictive indicator but a geometric tool for studying market symmetry and efficiency. It provides a structured way to visualize how recent movements would look if extended forward under both continuation and anti-trend assumptions. This blends Sloman’s original reflection concept with modern ER-based adaptivity.

Summary

Origin: Jim Sloman (1983) — trend continuation via reflection symmetry.

Extension: Adds ER-driven blending to model both continuation and anti-trend regimes.

Concept: Price reflection vs. direct forward extension.

Purpose: Study of geometric price symmetry and efficiency, not a trade signal.