Momentum Toolkit
One major problem with popular technical analysis techniques is that while they often give clearer pictures of market behavior than raw price data, they do so with great lag which keeps them a few steps behind price. This is most apparent with simple moving averages, but happens any time one attempts to smooth data. It is this one factor which has rendered many technical tools intellectually interesting but practically useless.
Momentum indicators are interesting measurements of price data and have zero lag when unfiltered by smoothing techniques. Unfortunately, these simple momentum curves jump around so much and give so many false signals that the true trend of the market remains just as blurred as the raw price data itself. Smoothing the momentum curve reduces the noise problem, but brings lag back into the picture. We are proud to say that we have solved this problem and have found a method of measuring momentum that both smoothes the momentum curve and keeps lag near zero. Below is a chart showing this indicator at work:
The red line is the raw 10 day momentum curve, or in other words the close of the current bar subtracted from the close of the bar ten days previous. The yellow line is MA_Momentum. You can see that it is extremely smooth and timely while the raw momentum curve is very jagged. MA_Momentum is smoother than a 20 day exponentially smoothed momentum curve, and has near zero lag. You will notice that the peaks and troughs occur at practically the same time as they do in the raw momentum curve, as do the zero line crossovers.
This is an important breakthrough in technical analysis, and one which ought to be in every trader's toolbox. MA_Momentum will filter any price series you choose to feed it, including other indicators. Like classical momentum, it is a variable length indicator so you can use it to track short, medium, or long term cycles.
Making an Intelligent Indicator Even Smarter
After using MA_Momentum as an input to MA_PredictDELUXE for a time, we discovered that the two worked so well together as to justify the creation of a new indicator combined the best of each into a unified whole. We have taken the predictive power of MA_PredictDELUXE and built an adaptive shell around MA_Momentum using a Genetic Algorithm to optimize all parameters and inputs. What we are doing is using artificial intelligence to predict the future value of MA_Momentum. The result is an extremely responsive and low lag MA_Momentum curve. Below is a chart:
The red line is a plain 13 bar MA_Momentum curve while the cyan line is the output of MA_MomentumGA. They are plotted on top of each other for comparison's sake. You can see that the cyan line leads the original both to the upside, downside, and at turning points. This tool will automatically reoptimize its prediction engine at user defined intervals, so it represents a truly adaptive indicator. Note that since MA_MomentumGA uses a Genetic Algorithm to do its optimization it can in effect search through over a million possible solutions each time it reoptimizes. This makes it extremely responsive to even the slightest changes in market character.
This chart shows the true power of this approach. The cyan line is the same 13 bar MA_MomentumGA and the yellow line is the canned momentum indicator as found in all popular charting programs. We have circled a number of turning points on this chart. These circles represent areas where MA_MomentumGA formed a turning point ahead of the canned momentum. Think about that for a minute! When was the last time you saw a smoothed indicator lead the raw original? There is not another momentum indicator on the market that can make similar claims.
Unfortunately, due to the complexity of MA_MomentumGA, it will only work with TradeStation2000i. The original MA_Momentum will work with the older charting program, as will the bonus described below. We offer free upgrades to all customers, so all it takes is a phone call or an email to get MA_MomentumGA once you have upgraded to TradeStation2000i.
Bonus Indicator!
Applied to the above chart is MA_Pivots, which tracks the swings of the market as they occur. The dots refer to two day pivot points (they are offset by two days on the chart) and the x's mark the intermediate swings that are formed by the minor pivots. This tool gives an objective swing count and clearly shows what the current trend of the market is. MA_PivotsTrend is the yellow indicator at the bottom and is a numerical representation of MA_Pivots. This is very valuable information which every trader ought to know. For a limited time, this indicator will be included free with any purchase of our Momentum Toolkit. Note that MA_Pivots will only work with TradeStation and not SuperCharts, although MA_PivotsTrend will work with both of them.
The price of the Momentum Toolkit is $275, which is a steal when you consider the value it will bring to your trading in terms of reduced whipsaws and increased confidence in your analysis. You will receive MA_Momentum, MA_MomentumGA, MA_Pivots, and MA_PivotsTrend with your order. Each of these tools is worth more than what we are asking for the entire package, so take advantage of this offer while it lasts. Click here for ordering information.