Day Trading Online Home Page  

The Mass Index, by Donald Dorsey, is supposed to spot reversals in the trend by monitoring price volatility (the distance between the high and low). More volatility inplies a bigger Mass Index and vice versa. According to the inventor, the most important pattern is a "reversal bulge.", i.e. when a 25period Mass Index rises above 27.0 and then falls below 26.5, indicating a reversal in price. The major trend (bullish or bearish) doesn't matter. As a 'swing trading' indicator, this indicator is unlikely to be of much use when day trading.

To calculate the Mass Index, calculate a 9 day EMA of the difference between the day's high and low prices; next calculate a 9 day EMA of the moving average you just calculated; next divide the first moving average by the second moving average; finally sum those values for the number of periods in the Mass Index (for example, 25 days).

previous next