Normalized Velocity as a Momentum and Trend Indicator
Summary
The document describes a velocity indicator framed as a smoother form of momentum that does not introduce lag. It offers four calculation presentations: unnormalized velocity, normalization by average true range, and normalization by standard deviation with or without sample correction. Because the indicator has no fixed bounds, it uses floating overbought and oversold levels and a floating zero line. A long level-calculation period can make the floating thresholds behave more like fixed levels.
The indicator includes multiple time-frame support, price inputs, alerts, and several coloring modes. For momentum use, the document recommends interpreting slope or crossings of the zero line. For trend identification, it recommends signals from crossings of the outer levels and longer calculation periods. No formulas, parameter values, market examples, or performance results are provided, so the text offers usage guidance rather than evidence that the indicator improves trading decisions. The floating thresholds also mean signals may depend on the chosen lookback and normalization method.
Key ideas
- Velocity is presented as a smoother momentum measure without added lag.
- Normalization options include average true range and standard deviation variants, alongside an unnormalized version.
- Floating outer thresholds and a floating zero line account for the indicator's lack of fixed bounds.
- Slope or zero-line signals suit momentum interpretation, while outer-level crossings suit trend interpretation.
- The document gives no performance evidence or recommended parameter values.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.