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Indicators: Smoother momentum

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Automated-Trading
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Smoother momentum:

Momentum indicator is one of the frequently used indicators in Technical Analysis. But it has one "issue": it is a very "nervous" indicator - the values it displays are far from being smooth, and that can cause a lot of false signals in a lot of cases - regardless of the calculation period that is used.

This indicator is one of the possible ways to solve that issue. The smoothing is not done by smoothing the momentum value, but the calculation itself is changed completely. Even with a completely changed calculation method, the values are, as it can be seen by comparing it to "regular" momentum, a real momentum indicator except that the values are much, much smoother and that makes the number of false signals insignificant compared to regular momentum.

PS: just a quick example and a comparison of the smoother momentum and the "regular" momentum:

As it can be observed, there is no lag compared to "regular" momentum of the same period quite the opposite: in some cases the smoother momentum is leading compared to regular momentum, and the values of the smoothed momentum are (as its name tells us) much, much smoother.

Author: Mladen Rakic

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