Extreme Momentum Indicators and Trading Operations
The Excessive Momentum indicator automatically detects the broken balance between supply and demand of investors in the financial market. Detecting this broken balance gives great market timing for entry and exit for our trade. In this short article, we explain some of the controllable inputs in the Overspeed Indicator.
There are four main inputs controlling the calculation. They are:
* Bars to Scan: The indicator calculates the amount of candle bars. Choose a larger number if you want to see the calculation over a longer historical period.
* Momentum Strength Factor: To find out the momentum strength is the strength of the extreme momentum. It can range between 0.1 and 0.5. Theoretically it can go up to 1.0. However, you will not get many signals to trade. The default setting is 0.1. You can try different momentum strength factors to optimize your trading performance.
* Balance Fractal Wave Scale: This controls the size of the input fractal wave when we detect excessive motion. If you enter a larger number, you get fewer signals to trade. The default setting is 0.5.
* Detrending Period: This input controls the statistical calculation in the algorithm. It should remain between 20 and 50.
The above 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 that you can try different inputs and check how they perform in historical data. The rest of the inputs are probably self-explanatory by their names.
Now, we cover trading signals. In the Extensive Momentum Indicator, you get two signal alerts. First, you will be alerted when the market is starting to move excessively. In this case, it will inform you of the starting price. At this stage, the extreme momentum has not yet fully expanded.
Secondly, you will be alerted when the market is full of extreme momentum. At this stage, you will be notified of both the opening price and the closing price of the extreme momentum.
Both the initial value of the overdrive and the final value of the overdrive form an overbought zone. It depends on your choice which signal you want to trade. You can use the zone as a breakout trading when the zone is narrow. When the area is sufficiently large, it may be possible to target some upside trading opportunities as well.
Also, this excessive momentum zone can be considered as an accumulation or distribution zone in volume spread analysis. You can further find accumulation and distribution area characteristics using our Volume Spread Pattern Indicator (paid and advanced versions) or Volume Spread Pattern Detector (free and lite versions).
Below is the landing page for the Extreme Speed Indicator.
Here is the link to the Volume Spread Pattern Indicator (Paid and Advanced Version).
Here is a link to Volume Spread Pattern Detector (free and lite versions).
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