Momentum [Mom]

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The Momentum function determines the amount by which a field has changed over a given period of time, expressed as a ratio to 100. Parameters ------------------ Data          The data to use in the calculation. This is typically a field in a data series or a calculated value. Period        The number of bars of data to include in the calculation, not including the current value.                   For example, a period of 3 compares the current value with the value three bars ago. Function Value ------------------------ The Momentum Indicator is calculated by dividing the current value of the data by its value a given number of bars ago. It is traditionally multiplied by 100 for easier graphing. The Momentum Indicator at the beginning of a data series is not defined until there are enough values to fill the given period. Close     Mom(Close,2) ------------------------------------    2    3    4                200                <--- The momentum is (4/2)*100.    6                200                <--- The momentum is unchanged (6/3)*100.    6                150                <--- The momentum decreases (6/4)*100. Usage ----------- The Momentum Indicator is useful for determing trends in the data. When the momentum reverses direction, the trend is typically changing direction. A moving average can be used to smooth out day-to-day changes. The Momentum Indicator has also been used as a leading indicator of market sentiment. Abnormally high or low values have been observed to precede reversals. For example, a rapid increase in price (causing a high momentum) can be used to identify when the general market is jumping on a trend, which often occurs when the actual cause for the trend has passed. Therefore, following this rapid increase, the price may often decrease. Source ------------ This indicator is based on an entry in "Technical Analysis From A To Z" by Steven B. Achelis.