Price Momentum Oscillator: Double-Smoothed Rate of Change

Summary

The Price Momentum Oscillator (PMO) is a momentum indicator built from the rate of change in closing prices. It first calculates the close-to-close percentage change, scales that value, then applies two successive smoothing stages. A third adjustable period controls an exponential moving average of the resulting PMO, which serves as its signal line.

The indicator therefore has three parameters: the primary smoothing period, the secondary smoothing period, and the signal period. Comparing the PMO with its smoothed signal can help traders inspect changes in price momentum, although the document does not specify entry or exit rules, preferred parameter values, or how to interpret particular crossings. It provides calculation definitions but no empirical results, market-specific guidance, or discussion of limitations such as lag from smoothing. The description is an indicator specification, not a tested trading strategy.

Key ideas

• The PMO starts with the percentage change in closing price from the previous close.
• It applies two smoothing stages to the rate-of-change series.
• A third parameter sets the exponential moving average used as the signal line.
• The document gives no trading rules, parameter recommendations, or performance evidence.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.