Returns Momentum Oscillator RMO

Returns Momentum Oscillator, or RMO, is an MT5 indicator that measures how the volatility of price returns is changing and shows the result as an oscillator around a zero line. Bands based on standard deviation mark readings that are unusually large, which traders often watch as possible turning points.

How it works

The indicator starts from price returns and builds an exponentially weighted measure of volatility. It then looks at the difference between those volatility readings. The idea behind this approach is that volatility moves in waves and that changes in returns can show up before they are obvious in price.

Several processing steps follow, each with a purpose:

• The signal is root mean squared, which pushes its distribution closer to a normal one. The aim is to avoid the long periods stuck in overbought or oversold territory that classic RSI-type tools can show.
• A high-pass filter removes slow, low-frequency movement that you may not want to include.
• The signal is zero-meaned, so the zero line sits at the average and the readings are not skewed to one side.
• A smoothing step with low lag reduces noise while keeping the line reasonably responsive.

Standard deviation bands

Bands are drawn around the oscillator using a multiple of its own standard deviation. When the line moves beyond a band, the colour changes to flag an outlier. This works like the overbought and oversold lines on RSI, but the levels are tied to how the indicator has actually behaved recently.

Divergence

Because the processed signal is close to normally distributed, it can also be compared against price for divergence, for example price making a new extreme while the oscillator does not.

Markets and timeframes

RMO runs in a separate window on any symbol and timeframe available in your MT5 terminal. Behaviour will differ between instruments and between short and long timeframes, so review how it reacts on the markets you trade before using it in live decisions.

Settings

The defaults below are a starting point. Adjust one input at a time and compare results on historical data.

Risk

Installation

1. Open MetaTrader 5 and choose File, then Open Data Folder.
2. Go to the MQL5 folder, then Indicators, and copy the downloaded indicator file into it.
3. Restart the terminal or right-click in the Navigator and choose Refresh.
4. Drag RMO from the Indicators list onto a chart and adjust the inputs if needed.

If the oscillator looks empty, scroll the chart back so the terminal loads more history, then check that the inputs are valid.