Triangular Momentum Oscillator X Adjustable Moving Average (intermediate)

Triangular Momentum Oscillator (TMO) X Adjustable Moving Average (AMA)

Notes:

These indicators and concepts are specifically designed for TradingView.com

All indicator breakdowns will be found in the indicators tab on the home page of: STRATEGY

Indicators:

Go to INDICATORS and type in TMO

Go to SETTINGS of TMO and set Length to 7

Go to INDICATORS and type in AMA or Adjustable MA

Go to SETTINGS of the AMA and turn the Length to 30 and turn on Smoothed Candles

‍

Finally turn of the candles by clicking the eyeball

How to Execute Long:

    Follwing Paramaters must happen

1. TMO must detect a divergence and print a Buy Signal
2. The smooth candles must begin to Increase in value (candle get bigger compared the previous candle and moves upwards on the chart)
3. Exit when TMO prints sell or exit when the candles begin decreasing in value

In Lehmans Terms: The graph on the bottom must print "buy" and stock candles must be slowly getting bigger and bigger.

How to Execute Short:

 Follwing Paramaters must happen

1. TMO must detect a divergence and print a Sell Signal
2. The smooth candles must begin to decrease in value (candle getS bigger compared the previous candle but moves downwards)
3. Exit when TMO prints buy or exit when the candles begin increasing in value (candles on the downtrend loose momentum and move upwards)

In Lehmans Terms: The graph on the bottom must print "sell" and stock candles must be slowly getting smaller and smaller.

This next part is advanced so don't be overwhelmed.

How does the TMA work?

The Triangular Momentum Oscillator (TMO) is a technical analysis tool that helps traders identify potential trends and reversals in financial markets. The TMO measures the difference between the current price and a triple-smoothed moving average of the price. It then plots this difference as a histogram, allowing traders to see changes in momentum over time.

Here's how the TMO is calculated:

1. Calculate the first smoothed moving average (SMA1) by averaging the closing prices of the past n/3 periods, where n is the length of the TMO.
2. Calculate the second smoothed moving average (SMA2) by averaging the closing prices of the past 2n/3 periods.
3. Calculate the third smoothed moving average (SMA3) by averaging the closing prices of the past n periods.
4. Calculate the TMO by subtracting SMA3 from the sum of SMA1 and SMA2, and then dividing by 2.

TMO = ((SMA1 + SMA2) / 2) - SMA3

The resulting TMO value can range between -1 and 1. A positive TMO value indicates an uptrend, while a negative TMO value indicates a downtrend.

To use the TMO in trading, traders may look for a few key signals:

• When the TMO crosses above the zero line, it may be considered a bullish signal, indicating that momentum is shifting in favor of buyers.
• When the TMO crosses below the zero line, it may be considered a bearish signal, indicating that momentum is shifting in favor of sellers.
• Traders may also look for divergences between the TMO and price action, which can indicate potential trend reversals.

How does the AMA work?

The Adjustable Moving Average (AMA) is a technical analysis tool that is used to identify trends and potential trend reversals in financial markets. The AMA is similar to other moving averages, but it adapts to changes in market volatility, resulting in smoother and more accurate signals.

The AMA is calculated using the following steps:

1. Choose a period length for the AMA, such as 10 or 20 periods.
2. Calculate the absolute value of the difference between the current price and the price from n periods ago.
3. Calculate the volatility by averaging the absolute values of the differences over the past n periods.
4. Calculate the smoothing constant, which determines the speed of the AMA's reaction to changes in volatility. The smoothing constant is typically set between 0 and 1, with higher values resulting in faster reaction times.
5. Calculate the AMA by multiplying the smoothing constant by the current price, adding the product of 1 minus the smoothing constant and the previous AMA value, and then dividing by the current volatility.

AMA = (Smoothing Constant * Current Price) + [(1 - Smoothing Constant) * Previous AMA] / Current Volatility

The resulting AMA value is a dynamic moving average that adjusts to changes in market volatility. When volatility is low, the AMA will be relatively smooth and slow to react to price changes. When volatility is high, the AMA will be more responsive and may generate signals more frequently.

To use the AMA in trading, traders may look for a few key signals:

• When the price crosses above the AMA, it may be considered a bullish signal, indicating that an uptrend may be beginning or strengthening.
• When the price crosses below the AMA, it may be considered a bearish signal, indicating that a downtrend may be beginning or strengthening.
• Traders may also look for changes in the slope of the AMA, which can indicate potential trend reversals.