Wo-Mo [Weiss Order Momentum]

Our everyday trading reality is that Buy Programs and Sell Programs are constantly being fired up and cooled down.

The act of initiating a Buy or a Sell program invokes activity in other Buy and Sell programs that are lurking within our electronic trading web.

The following is highlighted in yellow as it is an important point and should be fully and understand in order utilize the output of our algorithms which are surfaced on this site:

Wo-Mo is proprietary class of algorithms developed by Algo Futures that monitor each transaction in a particular market and output streaming sets of values from which, the aggregated change in momentum of the ferocity and half-life of Buy and Sell program invocations can be inferred.

This ongoing ‘action and reaction’ activity within the automated trading environment is the major determinant of changes in Price in the short-term.

When the aggregated behavior of the automate program trading is aligned and congruent, trends are created.  When the behavior is chaotic, Price is chaotic.

We have observed certain behavioral patterns and ‘footprints’ derived from Wo-Mo readings that frequently precede changes in Price.

These patterns are deduced by our Moab class of algorithms which monitor Wo-Mo output.

Real-time Moab signals are outputted on our WOW Index Charts for the S&P 500, Crude, STOXX 50 and Dow 30 WOW Index charts.

The trick to using Wo-Mo, as interpreted and plotted by Moab on WOW Index charts, in your trading

The following explains what is happening under the hood of the market with regards to automated trading runs and there repercussions, how an understanding of these activities affect changes in Price, and how you use our Moab algorithms and our WOW Index Charts to successfully recognize a real-time change in trend.

There are very few hard rules in trading, but from our experience, one hard rule is that, “A trend cannot be sustained without the accompaniment of substantive and congruent order flow.”

This kernel of truth is why we developed Wo-Mo.

Wo-Mo cannot predict the future ferocity of Order Flow…only the current state.

Thus, because of the chaotic nature of independent program trades automatically invoking responses from other program trades, Wo-Mo signals need to be validated by changes in Price.

Whenever there is a Wo-Mo indication, as plotted by our Moab indicator, this is only a signal to get prepared for a possible change in trend.

Changes in trend will not occur if the degraded level of Wo-Mo resumes to prior levels - which is a very common and normal behavior.

To manage this uncertainty of whether or not the aggregated behavior of the automated trading order flows will revert to patterns of alignment and congruency that will continue to support the current trend; always enter a Moab trade using a stop in the direction of the new trend.

Long trades are entered via a Buy Stop one tick above the most recent pivot, and Short trades are entered via a Sell Stop one tick below the most recent pivot.

If after a Long Entry Stop is place, price moves down and breaches the most recent low pivot, the Entry Stop is to be removed.

If after a Short Entry Stop is placed, price moves upwards and breaches the most recent high pivot, the Entry Stop is to be removed.

When a Moab signal is plotted, the exact Stop prices are surfaced in a balloon on the WOW chart when your mouse is hovered over the Moab signal.

In summation - A Moab signal is simply stating that the current levels and behavior of Order Flow Momentum is no longer sufficient to support the current Price move.  If Order Flow Momentum levels increase, as measured by Algo Futures' algorithms, Wo-Mo and Moab, the trend will continue.

Moab offers a signal for a potential change in trend, which must be validated by a change in price.  This change in price is managed by entering via stops.

Thus, we think that Moab offers excellent visibility and ample time for a trader to catch changes in trends.

Hope this helps...