Price Momentum Oscillator: Double-Smoothed Rate of Change
Summary
The Price Momentum Oscillator (PMO) converts one-period price change into an oscillator by applying two successive custom exponential-style smoothing steps. The first operates on the percentage change; the second smooths a scaled version of that result. A separate moving average of the PMO serves as its signal line, with a zero reference level shown for context.
The document explains that its smoothing multiplier uses the period directly, rather than period plus one as in a conventional EMA. It presents indicator code and parameter defaults, but gives no market examples, performance results, or rules for entering and exiting trades. The claim that standardization makes the PMO useful for comparing relative force is not supported with a comparative test. Its usefulness therefore depends on implementation details and validation across instruments and timeframes; the document does not establish that its signals are predictive.
Key ideas
- The PMO begins with a one-period rate-of-change calculation.
- It smooths the rate of change twice using custom EMA-like calculations.
- The custom smoothing multiplier uses the period directly rather than period plus one.
- A moving average of the PMO is displayed as a signal line.
- The document provides no evidence that PMO signals predict future returns.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.