{"product_id":"v09-c05-double-pdf","title":"V.9:5 (202-205): Double-Smoothed Momenta by William Blau","description":"Double-Smoothed Momenta\nby William Blau\u003cbr\u003e\u003cbr\u003eThe prices of stocks and commodities are usually plotted as bar graphs. In a bar graph, each bar\nrepresents a certain time interval, be it an intraday, daily or weekly bar. The last price in each time\ninterval is designated as the close. For certain markets, the daily close is actually a price determined from\nthe period that makes up the closing range.\u003cbr\u003e\u003cbr\u003eThe close, or settlement price (the price at which all outstanding positions in a stock or commodity are\nmarked to market), could be considered the most important piece of trading data. One reason is that the\nclose may psychologically affect the trader's outlook. For example, a position that is a loss during an\nintraday time period may become profitable by the close, increasing the trader's confidence that the\nposition is the correct one. Another reason is that intraday volatility often clouds the true direction of the\nmarket. Focusing on the closing prices can provide a clearer picture of the trend. Numerous technical\nindicators are based only on the closing price.\u003cbr\u003e\u003cbr\u003eHowever, many technical indicators that a use the closing price are oversensitive to the singular changes\nin direction of the closing price. A number of these indicators will in effect give false trading signals due\nto this sensitivity. Clearly, the method used to smooth the price curve is very important. An indicator that\ngives smooth curves that indicate price levels at important peaks or valleys would be a superior trading\ntool.\u003cbr\u003e\u003cbr\u003eOne such indicator is the Double-smoothed Momenta (DM). The formula for the double-smoothed\nmomenta relates various portions of a series of closing data to today's close (Figure 1). The formula takes\ninto account maximum and minimum values of the closing price in prescribed intervals. These\nrelationships are then smoothed through the use of multiple exponentially smoothed moving averages (or,\nin other words, an exponential moving average of an exponential moving average). This indicator is\ndesigned to warn of overbought and oversold market conditions and to reduce false trading signals.","brand":"store-traders-com","offers":[{"title":"Default Title","offer_id":52133856182641,"sku":"\\V09\\C05\\DOUBLE.PDF","price":3.95,"currency_code":"USD","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0900\/3843\/6209\/files\/unnamed_3e36fe3b-6610-4cec-bfc5-896d2cf06b1a.jpg?v=1739654391","url":"https:\/\/shop.traders.com\/products\/v09-c05-double-pdf","provider":"Stocks \u0026 Commodities","version":"1.0","type":"link"}