What Is Momentum Oscillator

The Momentum Oscillator is the current price divided by the price of a previous period, and the quotient is multiplied by 100. The result is an indicator that oscillates around 100. Values less than 100 indicate negative momentum, or decreasing price, and vice versa.

Momentum Oscillator Indicator

The Momentum Oscillator, as its name suggests, is a momentum indicator. It measures the amount that a financial asset’s price has changed over a given period of time. The Momentum Oscillator is an unbound oscillator, meaning there are no upside or downside limits.

How To Calculate Momentum Oscillator

Formula:- Momentum Oscillator = 100 * (data / data_period)

Why Use Momentum Oscillator

Traders use the Momentum Oscillator to analyse price trends. If the MO reaches extremely high or low values (compared to its older values), one can assume a continuation of the price trend. However, if the prices make a new high or low that the MO doesn’t confirm, it may signify a price reversal.

How to Use Momentum Oscillator Trading Strategy

Bullish Scenario:- Since it oscillates around 100, if the value goes above 100, it indicates a positive gain, i.e. a bullish trend.

Bearish Scenario:- When the value of MO goes below 100, it is considered a negative trend and thus a bearish market.

Building The Momentum Oscillator Trading Strategy in Mudrex

Strategy:- 

BUY:- MO crossesup 100 with a signal period of 12 days.

SELL:- MO crossesdown (-10) with a signal period of 12 days

TIME FRAME:- 4Hrs

Creating on Mudrex:- 

We will use 2 MO indicator blocks. One for selling and One for buying.

For buying, we will use the following settings:-

For selling, we will use the following settings:-

Final Strategy:-

Testing:- 

Running on Binance Futures: BTC/USDT with tick interval of 4H yielded an overall profit of 87.31%

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