Investing & Trading

Momentum Percent Study

By Samantha Baltodano


TL;DR:

Consider the Momentum Percent study an oscillator for Momentum. It normalizes and bounds momentum to a range of 0-100%. This makes it easier to compare current price changes to previous prices and also to the prices of other securities.


What Is the Momentum Percent Study?

A Momentum Percent Indicator (oscillator) is a technical indicator which shows trend directions and measures the velocity of the price fluctuations. Momentum is a price expressed as a percentage of an earlier price.


Difference Between Momentum Percent Study and Momentum Study


The difference between Momentum Percent and the Momentum study is the Momentum Percent is normalized to be bounded to oscillate between 0 and 100 percent of recent price variation. 


As is, the range of a security’s price can be easily compared to any other security because of absolute percentage variation and not prices itselves.


The Benefits of Percentage Momentum


  • It indicates volatility
  • Its ideal to compare fluctuation and volatility between other assets
  • In assets that change by a large range of prices like crypto it's the best way to work with momentum.


Trade Signals


It is considered a buy signal, when the Momentum Percent values start to rise, and a sell signal when the values start to decrease.


Summary

  • The Momentum Percent study shows you the direction of a trend and measures the speed at which the price is changing.
  • Unlike the Momentum study, Momentum Percent is normalized to be bounded to oscillate between 0-100%. This makes it easier to compare the Momentum Percent value to previous price data and other securities.
  • Buy when the Momentum Percent is increasing. Sell when the Momentum Percent is decreasing.

Momentum Percent is just one of many studies that Archaide automates. For a full list of strategies and studies available click here.


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