Understanding the MMI Index
The MMI Index is calculated by analyzing local extrema—peaks and troughs—within a selected lookback period (e.g., 100 candles). By comparing the actual number of extrema to the maximum possible in a perfectly oscillating market, MMI quantifies market behavior on a scale from 0 to 100. Interpreting MMI Values 0–30% : Highly random, indicating a lack of structure. 30–60% : Range-bound or noisy market conditions. 60–100% : Strong trend or momentum present. A low MMI suggests a sideways market, ideal for mean-reversion strategies, while a high MMI indicates trending conditions, suitable for trend-following strategies. Practical Applications of MMI Strategy Selection : Use MMI to switch between trend-following and range-bound strategies. Noise Filtering : Avoid trades when MMI indicates low signal-to-noise ratios. Confirmation Tool : Combine MMI with other indicators like RSI or MACD to confirm market regimes. MMI vs. Traditional Indicators Feature MMI Ind...