Simple Price Momentum - How To Create A Simple Trading Strategy

The Simple Price Momentum indicator is a trend-following tool that identifies momentum shifts by combining volume-weighted and smoothed moving averages to signal potential long entry points.

Usage

The strategy is primarily used to identify long-side momentum in trending markets. Users can observe the background coloring (green) which indicates when a long entry condition has been met based on the intersection of price action and moving average filters.

• Momentum Confirmation: The strategy triggers when price crosses above the VWAP while remaining below the SWMA, subsequently confirming the move when price also clears the SWMA.
• Order Management: By toggling the "Consecutive Orders" setting, users can decide whether to take every valid signal or only the first signal in a new momentum sequence.

Details

The script utilizes two primary technical filters to determine momentum:

1. Symmetrically Weighted Moving Average (SWMA): Used as a smoothing filter for price action to determine the medium-term trend direction.
2. Volume Weighted Average Price (VWAP): Acts as a benchmark to assess whether the current price is moving with positive volume-backed momentum.

The logic follows a multi-step verification: it first looks for a "trigger" where price crosses the VWAP. It then "saves" this state until the price successfully crosses above the SWMA, at which point the long signal is finalized.

Settings

• Consecutive Orders: When enabled, the script allows for multiple consecutive entry signals. When disabled, it only signals the initial crossover event.
• Stop Loss: Defines the exit point for losing trades in ticks/points.
• Reward/Risk: A multiplier applied to the Stop Loss value to determine the Take Profit level.

FAQ

How do I use the Simple Price Momentum strategy?

You can use it to identify long entries by looking for the green background highlights which indicate a momentum alignment between VWAP and SWMA.

What assets does this work best on?

While designed as a logical framework for momentum, it is often applied to trending markets like Equities or Crypto where VWAP is a significant indicator of institutional flow.

How can I access the Simple Price Momentum indicator?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.