Momentum-Volatility Convergence Strategy

Family: hybrid · Regime: trending · Complexity: high · Asset classes: Forex, Indices, Commodities · Timeframes: H1, H4

Thesis

Market trends are most tradable when momentum (RSIOMA) and volatility (TDI/VR) align. By requiring a double-smoothed momentum trigger (RSIOMA) to occur within a confirmed volatility regime (TDI), we filter out 'fakeout' breakouts. The Volatility Ratio ensures that risk is dynamically adjusted to the intensity of the price movement, assuming that higher volatility entries require more 'breathing room' but smaller position sizes to maintain equity stability.

Components

• Traders Dynamic Index (TDI) (regime) — Establishes the macro-regime; the RSI Price Line must be on the correct side of the Market Base Line to confirm trend presence and volatility expansion.
• Arrows Base Template (direction) — Provides the primary trend filter (Directional bias). In this implementation, the Arrow logic is defined as Price > EMA(50) for long and Price < EMA(50) for short.
• RSIOMA (RSI of Moving Average) (entry) — The entry trigger; its double-smoothed nature filters out noise, entering only when the RSI of the underlying price average crosses its own signal line.
• Ichimoku Kinko Hyo (exit) — Used for exit logic; the Kijun-sen represents the 26-period equilibrium level. A cross back through this line suggests a trend exhaustion or reversal.
• Volatility Ratio (VR) (risk) — Standardizes the stop loss and position sizing based on current volatility expansion relative to historical average.

Known failure conditions

• Consistently hitting stops during low-volatility 'sawtooth' price action where VR < 1.0.
• RSIOMA values pinning at extremes (80/20) for extended periods without price movement (momentum divergence).

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