Momentum Percent Difference Study

By Samantha Baltodano

TL;DR:

The Momentum Percent Difference analyzes the percent difference between the current and past value of a Simple Moving Average. The difference is plotted on a histogram. Histogram crossovers above and below the zero level may indicate important trading signals. 

What Is the Momentum Percent Difference Study?

The Momentum Percent Difference study is a momentum-based technical indicator. 

Unlike the regular Momentum study, which analyzes the difference between the current and a past price value, this indicator takes into account the current and a past value of a moving average.

The Momentum Percent Difference calculates the percent ratio of the current Simple Moving Average value to its past value. This ratio is then smoothed by another simple moving average. 

The difference between the original ratio and its moving average produces a histogram plot as shown below. 

Source: ThinkorSwim

Figure 1: Percent Difference histogram

Histogram crossovers above and below the zero level may indicate important trading signals. 

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

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