What Really is Momentum ?

[walterw 10]

Ok, so here I go... I promised to deal with this non friendly issue and I hope I can bring some light in the dark.

 

So What really is momentum ? well... funny thing, I have come to the conclusion that we always have momentum ¡¡ its just from wich perspective (say timeframe) you look at it that you will determine that you have or not momentum...

 

So that makes it very complicated for most rookies and even old seasoned traders to determine momentum conditions... because its like a very hard to describe fenomena and even its harder when you want to put it in a perspective of what YOU want to do...

 

So the first good thing to understand momentum is to know what are the lenses YOU are using to perceive the market...

 

Because depending on those lenses you will see certain realities that maybe other traders who have other lenses do not see and viceversa...

 

Who is correct ? or who is wrong ? in their apreciation of reality... no one..

 

Everybody is correct and everyboody is wrong, all routes in trading are good, and all are bad.. :crap: the diference between losers and winners actually its not given by the specific route, rather by the way a trader is objective and has confidence and perseverance on the use of his lenses, after he has detected some sort of edge...wichever it is...

 

For some it may be Volume, for others RRR, for others Momentum, standard deviations, patterns, times of day, you name it ... and so on...

 

So Momentum may be an edge or may not be an edge, still you can be profitable with or without it if you have other certain edge...

 

I hear some teachers get obsessed about momentum, and yes even myself I teach to trade on momentum conditions... BUT eventually that momentum is like a women, she is there when you cant kiss her, or she simply is not there when you are ailing for love...

 

So when she is, enjoy it, she is not, just survive and keep going...

 

My private education on forex is based in momentum conditions, but I have to recognize and now after several years of trading and mentoring that trying to determine momentum can be a big headache eventually, and its not worth it to give that excesive attention...

 

I have discovered that RRR (Risk Reward Ratio ) on any given trade comparing entry vs stop (risk) and entry vs potencial exit (Reward) its the best way to have that "edge" and from there on become confident and consistent with something... even when you know that your method may not be the best out there... but becomes the best for YOU because you keep doing the same thing every other day...

 

So thats my filosofy about momentum, its like love or women... hard animal, dificult (sorry ladies)... but its true, you have to get what you can get and dont desperate if its not there... better you must have a good RRR embeded to your strategy (as the chimp does) and dont be so hard on yourself...

 

Anyway on the next posts I will show you some pictures of this momentum ladies that may get your nerves a little waka waka... they are momentum readings not from my private course and that can be used from any of you guys...

 

For my students, if you guys want to incorporate some of this, just go ahead... so far I personally got to the point of not using any other thing than my multitimeframe method ( private stuff )

 

Many ask me whats my private course edge, and ethically I can not respond that here on the forum, but I can gladly respond emails.

 

So let me show you guys some nice toys... cheers Walter.

[walterw 10]

Ok, lets get started with this little fascinating lady... she is a 3 min chart of EUR/USD with a cybercycle applied to it with a little twitch to the inputs I did that make it pretty interesting to measure from some "lense" how momentum is doing...

 

 

 

It can give you an idea of where you are and hope that may continue for a while... now you can see this may resolve only a 30 % of your dilema... let me make a video on this indicator, cheers Walter.

[walterw 10]

Ok let me upload here some videos about this indi... So far the inputs I have programed actually work with EUR/USD... , I will soon post the code here as well, cheers Walter.

Momentum 1.swf

momentum 2.swf

[BlowFish 10]

Nice to see a new thread by the chimp, missed your participation when you decided to take private students.

[Kit 10]

Just find two indicators for momentum descerning ,Vininl_Cyber looks the same as on

 

thinkoswim, second have a little bit more filtering component and may be someone find it

 

usefull for momentum trading.

 

p.s. Whalter, glad to see you on the forum again, ii

Trend direction & force index.mq4

VininI_Cyber Cycle.mq4

[walterw 10]

Nice to see a new thread by the chimp, missed your participation when you decided to take private students.

 

 

Hi Blowfish, thanks for your greetings, yes its been a while since I dont post some stuff here, actually not much research lately, just plain trading so I thought I could do some postings for some weeks... cheers Walter.

[walterw 10]

Just find two indicators for momentum descerning ,Vininl_Cyber looks the same as on

 

thinkoswim, second have a little bit more filtering component and may be someone find it

 

usefull for momentum trading.

 

p.s. Whalter, glad to see you on the forum again, ii

 

Hi Kit, thanks for contribution, I will take a look at your indi, thought its been a while since I dont use anymore MT4... my core charting program is Ninja at this time... cheers Walter.

[walterw 10]

So lets see some screenshots of the latest days with this nice momentum indicator... I marked the most significant expressions of "momentum"... thought many other movements that are not there still where very good for profitable scalping from a RRR point of view... cheers Walter

[walterw 10]

So lets see how we did today friday since European opening... I beleive nice... you can use something like this as a green or red light for whatever is your specific strategy... this can give you some sort of momentum "context"... I guess I will start looking it more often than not.. cheers Walter. ( by the way I did my 10 pips today jajja ).

 

I will share formula when I see more enthusiam on the forum, so far seems you guys are depressed jajja... :haha: :haha:

[brownsfan019 17]

Good to see you back Walter.

 

Here's my post expressing interest in the thread. Momentum has always been of interest to me, so hopefully the thread develops.

[walterw 10]

Good to see you back Walter.

 

Here's my post expressing interest in the thread. Momentum has always been of interest to me, so hopefully the thread develops.

 

 

Hi Brown ¡¡ nice to hear from you, I see you are still in the house ¡¡

 

well about this indi I will try to see the correct inputs for ES so we can also share this little simple momentum filter for ES traders as well...

 

Wanted to share also a picture of a down move wich was not validated by this momentum filter, thought my RRR based method gave me a 20 pips potencial trade there...

 

All interactions are welcome... remember this is only a simple momentum filter, not a consolidated method ( by no means )...

 

cheers Walter.

[tox 10]

Hi Walter,

I don't see your entries/exits on the last chart. Also seems your momentum indicator is always late comparing to the actual price action or even 1-2-3. Looks like simple drawing a pair of horizontal lines around 0 (i.e. thresholds) isn't enough to decide whether momentum is good or not really

[tox 10]

Hi Walter, looks like in this trade was far from your momentum indicator. Also white lines aren't very useful as they are now. Do you glue your RRR method with S/R lines or 1-2-3 thingy?

[brownsfan019 17]

Still here Walter. One of the few remaining from the old days.

 

Your screenshots look interesting. Once you post the code then I think others will participate - otherwise we are limited to watching.

 

I would like to see it on the CL (oil) contract.

[walterw 10]

Hi Walter,

I don't see your entries/exits on the last chart. Also seems your momentum indicator is always late comparing to the actual price action or even 1-2-3. Looks like simple drawing a pair of horizontal lines around 0 (i.e. thresholds) isn't enough to decide whether momentum is good or not really

 

Hi Walter, looks like in this trade was far from your momentum indicator. Also white lines aren't very useful as they are now. Do you glue your RRR method with S/R lines or 1-2-3 thingy?

 

 

Hi Tox, as I made clear on a previous post this is by no means a complete methodology... it could be a momentum filter... on the snapshots I posted you can see the arrows happen when this indicator gets outside the box ( as explained on videos )...

 

About the one I got with my propietary (RRR based) system, it actually happened "out of context" for this particular filter...

 

And the thread does not aim to talk about a complete system, it only wants to show diferent type of momentum "filters" that you can choose to use with your "complete" methodology (wichever it is) as a green or red light "filter"... cheers Walter.

[walterw 10]

Hi Walter,

I don't see your entries/exits on the last chart. Also seems your momentum indicator is always late comparing to the actual price action or even 1-2-3. Looks like simple drawing a pair of horizontal lines around 0 (i.e. thresholds) isn't enough to decide whether momentum is good or not really

 

Yes... it is a threshold... and it works very good, remember that too much action near 0 means lack of momentum, action far from 0 "may sugest" momentum... Never forget what I said at the begining about ladies... ( sometimes they are there, sometimes not ) ... cheers Walter.

[tox 10]

Never forget what I said at the begining about ladies...

 

Gee, so trading with momentum is not easier than handling ladies... or the absence of them...

[walterw 10]

Gee, so trading with momentum is not easier than handling ladies... or the absence of them...

 

nope... momentum is like ( certain ) ladies, they may be there or may not be there when you most need them... :doh:

[tox 10]

hmm... subtle difference ...or not... Depending on the point of view I guess.

 

So if momentum is not there when we need it the most (i.e. position is open), should we tighten our stop loss?

[brownsfan019 17]

Walter suggested this not be your full system and that is probably good advice. Basing your entry/exit on a sole indicator could be trouble as all indicators have their faults.

 

Hopefully Walter will post the code as he said and we can test it out on other markets. Until then, it's a view only show.

[tox 10]

... all indicators have their faults...

How about an account equity indicator, it hasn't ANY faults!

[brownsfan019 17]

How about an account equity indicator, it hasn't ANY faults!

 

True - now use that to make money.

[tox 10]

True - now use that to make money.

I guess everybody should use it to calculate an appropriate size to trade, or maybe even to stop trading when it goes steady south

[walterw 10]

Hi Tox, this would be a good thread to get started on RRR concepts by the Chimp http://www.traderslaboratory.com/forums/f34/my-entry-vs-my-stop-vs-952.html you will notice that the relation between your entry vs your stop and the entry vs your potencial exit will dictate a probable RRR... its funny but the amount of contracts its a second consideration for myself as I beleive that I would not put in jeopardy even smaller amounts of money if they really dont have potencial, thats why I trade (AIAO) all in all out since I started trading many years ago... its some time very distressing to get a stop on one of the large positions and then get a good one on a small position... :doh: jajjaj :haha: :haha:

 

 

Ok, so on next post let me show todays stuff and codes, cheers Walter.

[walterw 10]

Ok, so monday has being working pretty nice specially for the US session so far... very clear momentum filter so far on EUR/USD....