MQL5 - Language of trade strategies built-in the MetaTrader 5 client terminal

Source code library - Expert Advisors, Indicators and Scripts

Hundreds of Forex Robots from MetaTrader Market at Your Service
To post a new code, please log in or register

Interesting script?
So post a link to it -
let others appraise it

You liked the script? Try it in the MetaTrader 5 terminal

2005.11.29 11:54
Momentum

Momentum - indicator for MetaTrader 4

| English Spanish Portuguese

Views:
5629
Rating:
votes: 1
momentum.gif (8.85 KB)
Momentum.mq4 (1.9 KB)view


    The Momentum Technical Indicator measures the amount that a security’s price has changed over a given time span. 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 and turns up and sell when the indicator peaks and turns down. You may want to plot a short-term moving average of the indicator to determine when it is bottoming or peaking.

    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 turns down, you should assume prices will probably go still higher. In either case, only trade after prices confirm the signal generated by the indicator (e.g., if prices peak and turn down, wait for prices to begin to fall before selling).

  • You can also use the Momentum indicator as a leading indicator. This method assumes that market tops are typically identified by a rapid price increase (when everyone expects prices to go higher) and that market bottoms typically end with rapid price declines (when everyone wants to get out). This is often the case, but it is also a broad generalization.

    As a market peaks, the Momentum indicator will climb sharply and then fall off — diverging from the continued upward or sideways movement of the price. Similarly, at a market bottom, Momentum will drop sharply and then begin to climb well ahead of prices. Both of these situations result in divergences between the indicator and prices.

    Calculation

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

    MOMENTUM = CLOSE(i)/CLOSE(i-N)*100

    Where:
CLOSE(i) — is the closing price of the current bar;
CLOSE(i-N) — is the closing bar price N periods ago.

Technical Indicator Description

Full description of Momentum is available in the Technical analysis: Momentum