In the background subtraction method one of the core issue is; how to setup the threshold value precisely at run time, which can ultimately overcome several bugs of this approach in the foreground detection. In the proposed algorithm the key feature of any foreground detection algorithm; motion is used however getting the threshold value from the original motion histogram is not possible, so for the said purpose smooth motion histogram is used in a systematic way to obtain the threshold value. In the proposed algorithm the main focus is to get a better estimation of threshold so that to get a dynamic value, from histogram at run time. If the proposed algorithm is used intelligently in terms of motion magnitude and motion direction it can distinguish accurately between background and foreground, camera motion along with camera motion and object motion.