Momentum vs Non-Momentum

[walterw]

Hello everyone ¡¡ we know that market climate could be classified into two great catergories: momentum (strength, trending) and non-momentum (weak, non trending) conditions... thus giving us two clear contexts in order to trade diferent type of strategies...

For example if you have momentum conditions you may want to trade trend trades and trail your position as long as possible... now if you have non-momentum conditions you may want to scalp the cycles back and forth...

So its a trader`s MUST to understand market climate... his strategy may work on certain conditions, or may not on other conditions... so if he understands the conditions his strategy has more chance to succeed...

There are many ways to understand market climate.... one of the ways I always look for that is on a 110T (russell) chart with a keltner 50 exp 3.5 atr... if bars are inside keltner, market is on non-momentum conditions, if market gets outside of keltner we have momentum conditions...

Now I want to show a very nice new way I find to measure climate... In this case I am going to use a 200V (russell) chart and on the price pane will have a 20 simple ma and a 50 simple ma with a keltner 50 simple 1 atr ...

You will notice that when the 20sma its "outside" the keltner and doesnt come back inside we got momentum, when "inside" we have non-momentum....

Simple as that... from there on you can see diferent strategies you can work on.... let me attach some examples.... cheers Walter.

[malvado xetra]

seeinG your momentum, non-momentum study. it is correspons to impulse elliott waves and correction elliott waves.

impulse waves = momentum

correction waves = non-momentum.

a propper counting of elliott waves it's another wave to identify momentum and non-momentum

the advantage of elliott is that seeing a big scale of time you can see a bigger picture of whats going on

MX

[walterw]

	Quote:	malvado xetra
	seeinG your momentum, non-momentum study. it is correspons to impulse elliott waves and correction elliott waves. impulse waves = momentum correction waves = non-momentum. a propper counting of elliott waves it's another wave to identify momentum and non-momentum the advantage of elliott is that seeing a big scale of time you can see a bigger picture of whats going on MX

yes Malvado, wave counts on a bigger time frame can perfectly be a way of measuring momentum... would be interesting to determine statistically how many times (mostly) the 3rd wave performs outside keltner.... cheers Walter.

[Nick1984]

Doesnt the ADX indicator show the strength of a trend?

[walterw]

	Quote:	Nick1984
	Doesnt the ADX indicator show the strength of a trend?

adx may show, but as to my experience it lags too much... meaning when adx starts to show strength you lost almost half the trip already...

I like more to see standard deviations or atr levels where you can recognize the market taking more temperature... and without lagging that much...

[cooter]

	Quote:	walterw
	adx may show, but as to my experience it lags too much... meaning when adx starts to show strength you lost almost half the trip already... I like more to see standard deviations or atr levels where you can recognize the market taking more temperature... and without lagging that much...

Another reason to use "rawADX", or simply the "unprocessed" DMI reading before it is "transmogrified" into ADX.

[walterw]

Todays first hour of session has been a clear non-momentum climate :zzz: ... I like to see how price cant take on keltners outerbands... this is the ideal cycle scalp context... cheers Walter.

[brownsfan019]

	Quote:	walterw
	adx may show, but as to my experience it lags too much... meaning when adx starts to show strength you lost almost half the trip already...

There aren't many indicators that are based on past prices that don't lag too much... By definition they are going to lag, some more than others I suppose, but lag nonetheless.

[walterw]

	Quote:	brownsfan019
	There aren't many indicators that are based on past prices that don't lag too much... By definition they are going to lag, some more than others I suppose, but lag nonetheless.

Well thats why I like bands for momentum determination... they give you an area on the present price where we know that momentum declares itself there... so its kind of a leading indication of momentum conditions... cheers Walter.

[cooter]

	Quote:	brownsfan019
	There aren't many indicators that are based on past prices that don't lag too much... By definition they are going to lag, some more than others I suppose, but lag nonetheless.

Use RSI on Delta Volume then. Seems to work out well for me.