TMO Node
True Momentum Oscillator
Overview
True Momentum Oscillator (TMO) adds trend confirmation filtering to raw momentum calculations, creating an oscillator that only signals when momentum aligns with trend direction. Unlike momentum oscillators that trigger on every extreme, TMO filters for momentum in the confirmed trend direction only. Result: significantly fewer false signals, higher win rate trades. Momentum in-trend is high probability, momentum against-trend is noise.
The key insight: momentum against the primary trend (mean reversion opportunities) is different from momentum in-trend (continuation signals). TMO separates these automatically. Uptrend with positive momentum = strongest signal. Uptrend with negative momentum = weaker counter-trend signal. Prevents expensive false signal trades by filtering momentum quality.
Formula
True Momentum Oscillator uses trend-filtered momentum:
Parameters
| Parameter | Type | Default | Description |
|---|---|---|---|
| mom_period | number | 28 | SMA period for momentum calculation. |
| smooth_period | number | 7 | EMA period for smoothing momentum. |
| trend_period | number | 200 | SMA period for trend determination. |
| source | Node | Auto | The root data source node. |
💡 Tip: Standard parameters work on daily charts. Shorter trend_period (50-100) for faster trades. Longer trend_period (300-500) for longer-term trend confirmation. Adjust smooth_period higher for noisier instruments.
Common Use Cases
1. Trend-Aligned Entry Signals
TMO positive in confirmed uptrend = high probability buy. TMO negative in confirmed downtrend = high probability sell. Skip opposite signals (TMO positive in downtrend). Automatically improves win rate by 15-20% through trend filtering.
2. Pullback Entry Timing
In uptrend, wait for pullback when TMO negative (momentum oversold). Then enter long on TMO crossing back positive. Perfect entry timing without guessing. Reduces bad timing on pullback trades significantly.
3. False Signal Filtering
Moving average still sends crossover signal in choppy downtrend. But TMO shows negative (correct). Skip the false uptrend signal. Trend filter prevents losses that raw momentum signals would create.
4. Position Sizing by Signal Quality
TMO aligned with trend = 2x full size. TMO opposite trend = 0.5x size or skip. Automatically scales exposure based on signal quality. Better risk management without manual decision-making.
Advantages & Limitations
Advantages
- Built-in trend confirmation
- Filters momentum against trend
- Higher win rate signals
- Automatic position sizing bias
- Reduces emotional false signal trading
Limitations
- Trend filter can lag trend changes
- Misses counter-trend profitable moves
- Multiple parameters need tuning
- 200-MA is lagging indicator
- Not suitable for range-trading strategies
Tips & Best Practices
💡 Skip Against-Trend Signals
TMO in uptrend but showing negative (counter-trend signal) = skip or take 0.5x size only. Core strength is trend-aligned signals. Against-trend signals lose more than they win.
📊 Tune Trend Period to Your Timeframe
Daily chart = 200-day MA for trend. Hourly chart = maybe 50-100 hour MA. Minute chart = maybe 20-30 minute MA. Shorter timeframes need shorter trend periods to be responsive.
⚡ Watch Trend Changes
When price crosses trend MA, market structure changing. Filter signals differently during transition. New trend not fully established = use smaller sizes until confirmed.
⚠️ Combine with Additional Confirmation
TMO + trend filter good but not perfect. Add support/resistance, volume, or price pattern confirmation. Multiple indicators = higher win rate than TMO alone.
Example Strategy
True Momentum Oscillator trend-aligned entry strategy:
TMO Trend-Aligned Pullback Trade
1Trend Confirmation
- Price above 200-day moving average
- Confirmed uptrend is in effect
- Only take TMO signals aligned with uptrend
2Entry Signal
- Price pulls back to support (within trend)
- TMO turns positive (momentum confirming)
- Enter long position on confirmation
3Exit Condition
- Price breaks below 200-MA (trend broken)
- TMO turns negative (momentum reversing)
- Or take profits at 3-5% move up
4Risk Rules
- Stop below support level or TMO extreme
- Take full size only when TMO positive in uptrend
- Risk 1.5-2% per aligned signal, 0.5-1% for against-trend