A geartooth sensor utilizes an algorithm for establishing an adaptive threshold for the switch point of the sensor to minimize drift in the point at which the sensor output changes in relation to the target features it is tracking. The algorithm utilizes measured waveform peak and average outputs and applies a separate empirically derived constant to each value to quickly obtain the major portion of the adaptive threshold value from the product of the first constant and the peak output, and to refine the threshold value further with the product of the second constant and the average output.