Accurate, low lag momentum indicator
Smooth and timely
Less noise + better timing = higher profits
Have you tried to smooth your noisy momentum indicators, only to watch it lag farther behind price so much as to be useless? VEL removes all noise and reveals true momentum, WITHOUT ANY ADDITIONAL LAG!
|What Is VEL ?
The classical momentum indicator is a simple yet effective measure of market direction. However, the curve zig-zags a lot, producing many misleading values and false alarms. Typical attempts to remove noise by applying a moving average will seriously degrade its usefulness by adding lag. Jurik Research solved this problem with an advanced momentum oscillator that produces very smooth curves without any additional lag !
Notice how VEL eliminates the zig-zagging noise inherent in a classic 10-bar momentum signal. VEL is extremely smooth, compared to the jagged momentum line. Consequently, there are fewer false signals.
To smooth out jagged lines, users had typically either increased the momentum's length or smoothed it with a moving average. Unfortunately, either method adds lag, causing the smoother signal to produce late trades and lost profits. This classic trade-off between accuracy and timing has kept many investors from using momentum in their trading systems.
The chart compares performance of a typical smoothed momentum indicator (red line) and the zero-lag velocity indicator, VEL (blue line). When compared to VEL, we see just how much lag the classic method produced. In contrast, VEL turns earlier, giving you a head start in pinpointing reversals. This advantage can make a huge difference in profit, as well as open up new opportunities in momentum analysis.
An easy way to tell whether a trend is decelerating (losing momentum) is to spot disagreement between the direction of the market and direction of its own momentum. This disagreement is called "divergence" and VEL's smoothness and accuracy lends itself to a very powerful form of divergence analysis, detecting weakness without getting faked out on every bar!
The chart shows higher swing-highs during segment A of both the price and VEL time series. This parallel behavior suggests a continued price trend, which occurs during price segment B. However, in segment B, the swing-high is now lower in the VEL series. This divergence says the upward price action is rapidly decelerating and suggests an impending reversal. As shown, price does trend lower during the 2nd half of the chart. In segment C we see price potentially starting a new uptrend, but its divergence with VEL's lower swing-highs suggests there's no real energy to the upside, and price continues its downward movement.
NOTE -- Divergence analysis is not 100% perfect. (What is?) Nonetheless, if you perform divergence analysis, why not get the best?
TradeStation -- MultiCharts
eSignal -- Investor/RT -- NeoTicker -- Trade Navigator -- NinjaTrader -- Extreme Charts -- Sierra Chart
AmiBroker - Neoticker - NeuroShell - Wavewi$e - Tradecision - Matlab
DLL (for software programmers)
The VEL software package includes ...
For more details on VEL, download our illustrated PRODUCT GUIDE.
Download our TECHNICAL REPORTS. Lots of charts and comparisons.
Read our CUSTOMER's LETTERS. See what others have to say.
Read our FREQUENTLY ASKED QUESTIONS. For answers to technical issues.
VEL is an
indicator, not a trading system.
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