I get pretty riled up in this video about Momentum indicators and the importance of using a volume-based, rather than price-based, Momentum calculation.
Araz sent a great question about how to trade trend days and I'll do another video on the subject later. But in a nutshell, my rule-of-thumb is:
Don't take a reversal trade until you've seen exhaustion (or climactic) volume.
And I use my volume-based Momentum indicator (Better Momentum) to tell me when we've seen exhaustion buying or selling volume. Anyway, you can check out the video below and see me lose my cool about the humble Momentum indicator.
If you're reading this article via email or RSS reader, then follow this link to view the Momentum Indicator video on the website.
HIGH DEF VIDEO – MAY TAKE 15 SECONDS TO LOAD
Momentum Indicator & Trending Days (9:54)
Good luck with your Emini trading.
Follow this link to a feature article with videos explaining the Better Momentum Indicator.
I'm still trying to get into a rhythm trading here in Hawaii. Up at 5:30am for the market open and drinking lots of coffee.
To be perfectly honest this video is not very good – I don't feel as if I say anything of consequence. So please don't watch it. Apologies to Ralph, whose question I'm trying to answer.
On a brighter note – my surfing is going well, although I did get bounced across the reef this afternoon. Ouch.
HIGH DEF VIDEO – MAY TAKE 15 SECONDS TO LOAD
Momentum Indicator & Divergence Question (7:23)
Good luck with your Emini day trading.
Follow this link to a feature article with videos explaining the Better Momentum Indicator.
Friday's activity was extraordinary – not just in the Emini but US Dollar, Gold and Bonds too. I was expecting a bounce in the Emini after Thursday's close – because "all the sellers had sold" – but the speed of the move and subsequent action was a real roller coaster.
The video below shows my charts from Thursday and Friday. This is turning out to be a bit of a series on the Better Momentum indicator and exhaustion volume – apologies if I'm being repetitive.
If you're reading this article via email or RSS reader, then follow this link to view the momentum indicator video on the website.
HIGH DEF VIDEO – MAY TAKE 15 SECONDS TO LOAD
Momentum Indicator & "Running Out of Bullets" (5:41)
If you trade using the Better Momentum indicator a few points are worth making:
Exhaustion volume signals are plotted with only 1 bar delay.
Divergence signals are plotted with a variable delay. This delay is needed to confirm the signal. If the signal is close to the zero line the delay is usually only 1 bar, but can be as much as 4 bars if the signal is further from the zero line.
Exhaustion volume signals need to be confirmed with Divergence signals that happen subsequently. This is more important for shorter time frame charts. On longer time frame charts the exhaustion signal may actually mark the extreme price and start of the new trend.
I never take trades based on the Momentum indicator signals alone. I use price cycles (Better Sine Wave) and Professional/Amateur volume patterns (Better Pro Am) for confirmation.
Good luck with your Emini day trading.
Follow this link to a feature article with videos explaining the Better Momentum Indicator.
The Better Momentum indicator has just been updated with the addition of Exhaustion Volume signals. As a result I received an email from Mike asking for an example or two of how to use these signals. I hope this Emini day trade example helps. It's taken from Tuesday's trade.
The Short trade setup was influenced by Exhaustion buying volume up into 1108 – after which the Emini couldn't push further and started to drop. I Shorted at 1106 and took profits at 1103. The exit didn't hit my profit target but I got out because Exhaustion selling volume came in at the 1103 level and it coincided with Professional buying and cyclical support on the higher time frames.
I hope the video helps explain the new momentum indicator signals. It's just over 5 minutes, so shorter than previous videos.
If you're reading this article via email or RSS reader, then follow this link to view the momentum indicator video on the website.
HIGH DEF VIDEO – MAY TAKE 15 SECONDS TO LOAD
Momentum Indicator: Exhaustion Volume Signals – 1 December 2009 (5:46)
Good luck with your Emini day trading.
Follow this link to a feature article with videos explaining the Better Momentum Indicator.
"How does the Better Momentum indicator compare to Jurik's RSX … I'm not asking you to disrespect anyone in your answer, just an honest reply from being in the trenches as a trader would be appreciated."
Mark Jurik is a brilliant engineer and has done amazing work creating smooth, minimum lag indicators. I've bought a lot of his indicators and in fact I still use the Jurik Moving Average (JMA) to pre-process (smooth) data for the Better Sine Wave. You can check out his website here.
The RSX is Jurik's version of the popular RSI indicator – but smoother. He also has a momentum indicator called VEL. I've bought and tested both.
To answer the question, there are 2 differences between Jurik's RSX (and VEL) and the Better Momentum indicator:
Better Momentum is based on volume and measures waves of buying and selling. RSX (and VEL) are based on price alone.
Better Momentum is more "jagged" and not as smooth as RSX (and VEL). This does not bother me, as I'm trying to identify peaks in buying and selling for the divergence calculations – if I add smoothing it adds a delay to the divergence patterns showing up.
I hope that helps explain the major differences. I recorded a video too that compares these three momentum indicators: RSX, VEL and Better Momentum.
If you're reading this article via email or RSS reader, then follow this link to view the momentum indicator video on the website.
HIGH DEF VIDEO – MAY TAKE 15 SECONDS TO LOAD
Momentum Indicator Comparison – 18 November 2009 (11:28)
Just a note for Better Momentum indicator owners. In the video I have extreme buying and selling levels marked with large cyan dots. I'm experimenting with this feature and it may make it into the next version of Better Momentum.
Good luck with your trading.
Follow this link to a feature article with videos explaining the Better Momentum Indicator.
Got a question from Marcus, an Emini Dow (YM) trader, about the Better Momentum indicator signals. I thought it might be useful to share the video response. The comments here are equally applicable to the Emini (ES).
Before entering a reversal trade (against the prevailing trend) be sure to check for exhaustion or blow-off buying/selling activity. Two patterns typically occur:
First the exhaustion buying/selling activity followed by a series of bearish/bullish divergence patterns, or
A series of bearish/bullish divergence patterns followed by a final burst of (exhaustion) buying/selling.
To take a trade in the direction of the trend, you don't need the exhaustion buying/selling activity – just the Better Momentum divergence signal in the direction of the trend.
If you're reading this article via email or RSS reader, then follow this link to view the Momentum Indicator video on the website. Towards the end of the video there are a couple comments about the current market and what I'm looking for over the next few days.
This is a high definition video and may take 30 seconds to load. If you are having problems viewing the video you may need the latest version of the Adobe Flash Player.
You can click the "Full Screen" icon (beside the volume icon in the video controls) to see the video in full screen mode. Press Escape to exit full screen mode.
Momentum Indicator Question from YM Trader – 10 November 2009 (10:07)
Good luck with your Emini trading.
Follow this link to a feature article with videos explaining the Better Momentum Indicator.
