Moving Average Speed Can Spot Turns Before They Happen

The MA Speed indicator quantifies the velocity of a moving average by calculating its daily percentage change to identify potential trend reversals and momentum shifts ahead of price action.

Usage

The Usage section focuses on how the indicator translates moving average movement into a momentum-based oscillator. By plotting the rate of change, traders can visualize the strength of a trend rather than just its direction.

• Trend Identification: When the oscillator is above the zero line and colored green, the underlying moving average is rising, indicating bullish momentum. Conversely, when the oscillator is below the zero line and colored red, the moving average is falling, indicating bearish momentum.
• Spotting Reversals: A flattening of the histogram (moving toward the zero line) suggests that the trend is losing speed. A crossover of the zero line indicates that the moving average has officially changed direction.
• Momentum Extremes: Rapid spikes or drops in the indicator can highlight periods of "fast" price movement that may be unsustainable, signaling potential exhaustion.

Details

The MA Speed indicator is constructed by calculating the 1-day percentage change of a selected moving average. Unlike standard moving averages that lag price, this "speed" calculation highlights the rate of acceleration or deceleration.

The formula used is: ((Current MA / Previous MA) - 1) * 100.

This script allows for the selection of five distinct moving average types to suit different trading styles:

1. Simple (SMA): Standard smoothing.
2. Exponential (EMA): Places more weight on recent price data.
3. Hull (HMA): Designed to reduce lag while maintaining smoothness.
4. Weighted (WMA): Assigns linear weights to price data.
5. Volume Weighted (VWMA): Factors in trading volume to the average calculation.

Original concept by TradeStation; refactored and optimized by LuxAlgo.

Settings

• Length: Sets the lookback period for the chosen moving average calculation (e.g., 50).
• Source: Determines which price data point is used for the calculation (Close, Open, High, Low, HL2, etc.).
• AvgType: A numerical selector to choose the moving average algorithm (1 = Simple, 2 = Exponential, 3 = Hull, 4 = Weighted, 5 = Volume Weighted).

FAQ

What does a crossover of the zero line represent?

A zero-line crossover occurs when the moving average changes direction. A move from below to above zero means the MA has started rising, while a move from above to below zero means the MA has started falling.

How does the Length setting affect the indicator?

A shorter length will make the MA Speed indicator more sensitive to minor price fluctuations, resulting in more frequent crossovers. A longer length provides a smoother output that focuses on major trend shifts.

How can I access the MA Speed indicator?

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