Balanced Momentum

balanced momentum

The Balanced Momentum indicator eliminates the dropout effect which is seen in the Standard Momentum indicator. Specifically, the dropout effect refers to a significant rise or fall, when the last bar in the lookback period “leaves” the calculation.

Indicator Description

The Balanced Momentum indicator eliminates the dropout effect: The difference between the close of the last bar and the close n bars ago in the n-period momentum. When a large bar n periods ago drops out of the momentum calculation, this can create a significant distortion, as it will show as a change in momentum, even if there was no or little price change for the last bar.

To eliminate this problem, the balanced momentum input value n bars ago was replaced with the triangular moving average SMA(SMA(Input, n+1), n+1)[0]. This modification does not change the usability of the momentum indicator, but simply eliminates the distortion.

Other Library Indicators

The Indicator Library furthermore have categories for trend analysis, momentum oscillators, support / resistance and volume indicators. For trend analysis you may review the ADX, ADXVMA Plus, Heikin Ashi, MA Cross, or the Rainbow Filter. Library momentum oscillators include among others the Acceleration Deceleration, Awesome Oscillator, LBR 3/10 Oscillator, Slow RSI or the TDI. The Indicator Spotlight newsletter reviewed the TDI indicator here. For volume analysis you may review Better Volume, Force Index or the Relative Volume indicator.

Support / resistance indicators are available from the Session Tools category including the Hourly Pivots, Pivots Daily, Pivots Weekly, Pivots Montly and the Pivots N-Monthly indicators. This category also contains Camarilla Daily Pivots, Camarilla Weekly Pivots, Camarilla Monthly Pivots and the Camarilla N-Monthly Pivots. Our blogs have further information on trading with Pivot Points and the use of rolling pivots for trend detection.

The Indicator Library also has a category with Fibonacci indicators, including the Prior Day Fibonacci LevelsCurrent Week Fibonacci Levels / Prior Week Fibonacci Levels, the Current Month Fibonacci Levels / Prior Month Fibonacci Levels and the Current N Month Fibonacci Levels / Prior N Month Fibonacci Levels. Our Indicator Spotlight also discussed Fibonacci Retracement Levels specifically. Additionally, this category also contains the Fibonacci Bands indicator.

The Balanced Momentum indicator is available for NinjaTrader 8 and its application was discussed in detail in a blog post on the Kaufmann Efficiency Ratio.