Average Momentum - MetaTrader 5 Script | Forex Indicator Download - MT4/MT5 Resources - MetaTrader 5 Resources

The Momentum technical indicator measures how a security's price has changed over a given time frame. There are basically two ways to use the momentum indicator:

You can use the momentum indicator as a trend following oscillator similar to the Moving Average Convergence Divergence (MACD). Buy when the indicator bottoms out and move up, and sell when the indicator peaks and adjusts lower. You may want to plot a short-term moving average indicator to determine when a bottom or top occurred.

If the momentum indicator reaches extremely high or low values ​​(relative to its historical values), you should assume a continuation of the current trend. For example, if the momentum indicator reaches extremely high values ​​and then declines, you should assume that prices are likely to go higher. In either case, trades should only be made after the price confirms the signal generated by the indicator (for example, if the price peaks and turns lower, wait for the price to start falling before selling).

You can also use the momentum indicator as a leading indicator. This method assumes that market tops are usually determined by rapid price increases (when everyone expects prices to go up) and market bottoms usually end with rapid price decreases (when everyone wants to get out). This happens quite often, but is also a broad generalization of the situation.

When a market tops, the momentum indicator will climb sharply and then fall - diverging from price with continued upward or sideways movement. Likewise, at market bottoms, momentum will decline sharply and then begin to rise well ahead of price. These two situations lead to divergence between the indicator and price.

Momentum is calculated as the ratio of today's price to the price several (N) periods ago.

Momentum = closing price (i)/closing price (iN)*100

All the above is part of the Momentum included as a standard indicator in Metatrader (Metatrader 4 and Metatrader 5). But the current momentum is rather lacking in some of the options we need to make more reliable decisions when using it. This version attempts to add something that can help us all.

PS: A "big picture" comparison of "raw" momentum, and this version (for the sake of comparison lag, obviously, is almost non-existent)

Attachment download

📎 momentum_of_average_ydlvlc.mq5 (10.96 KB)

Source: MQL5 #22745