Excessive Momentum Indicator and Trading Process
The Excessive Momentum Indicator automatically detects the broken balance between supply and demand in the financial market. Spotting this broken balance provides great timing for the market to enter and exit our trade. In this short article, we explain some of the controllable inputs to the Hyper Momentum Indicator.
There are four main inputs that control the calculation of the excessive momentum indicator. They are:
*Erasable bars: The amount of candle bars for calculating the indicator. Choose larger numbers if you want to see the computation over a longer historical period.
* Momentum strength factor: Momentum strength is the strength of the excessive momentum of detection. It can stay between 0.1 and 0.5. In theory, it could go up to 1.0. However, you will not get many signals for trading. The default setting is 0.1. You can experiment with different momentum factor to improve your trading performance if you wish.
* Balanced fractal wavemeter: This entry controls the volume of the fractal wave when we detect excessive momentum. If you put a higher number, you will get fewer signals to trade. The default setting is 0.5.
* Aging period: This entry controls the statistical computation in the algorithm. It should stay between 20 and 50.
More than four inputs are important because they can affect the number and quality of trading signals. You can use the default setting most of the time. However, it is also possible to try different inputs and check how they perform in historical data. The rest of the entries are likely to be self-explanatory from their names.
Now, let’s cover the trading signals. In the excessive momentum indicator, you get two signal alerts. First, you will be alerted when excessive momentum starts in the market. In this case, it will notify you of the starting price. At this point, the hyper-momentum has not yet fully expanded.
Second, you will be alerted when the excessive momentum in the market is complete. At this point, you will be notified of both the starting price and the final price of excessive momentum.
Both the starting price and the final price of excessive momentum constitute the area of excessive momentum. In which signal you want to trade is up to your choice. You can use the zone as a breakout trade when the zone is tight. When the area is large enough, it may be possible to target some reverse trading opportunities as well.
At the same time, this excessive momentum area can be considered either an accumulation area or a distribution area in the volume difference analysis. You can also find the symptoms of the accumulation and distribution zone using the volume diffusion pattern indicator (paid and advanced version) or the volume diffusion pattern detector (free and lite version).
YouTube video momentum indicator: https://youtu.be/oztARcXsAVA
Below is the landing page for the excessive momentum indicator.
Here is the link for the Volume Spread Pattern Indicator (paid and advanced version).
This is the link for Volume Spread Pattern Detector (Free and Light Version).