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Note: This download requires NinjaTrader 8 release 8.1.3 or newer.

Introduction Mass Index

The Mass Index for NinjaTrader is a technical analysis indicator that examines the difference between high and low prices over time to identify potential trend reversals. Developed by Donald Dorsey, it is unique in its approach, focusing on volatility rather than price direction or volume. This makes it a valuable tool for traders seeking to anticipate changes in market trends without relying solely on traditional indicators.

Key Features of the Marker Indicator

1. Customizable Moving Averages: A standout feature of this implementation of the Mass Index is the ability to customize the moving averages used in its calculation. Traders can select from various types of moving averages for both the first and second exponential moving averages (EMAs):
   • Simple Moving Average (SMA)
   • Exponential Moving Average (EMA)
   • Wilder's Moving Average
   • Hull Moving Average (HMA)
   • Triangular Moving Average (TMA)
   • Weighted Moving Average (WMA)
   • Volume Weighted Moving Average (VWMA)
   • Triple Exponential Moving Average (TEMA)

   By customizing these moving averages, traders can tailor the indicator to better suit their trading style and the specific characteristics of the security they are analyzing. For instance, using an HMA may provide faster responsiveness, while a WMA might offer smoother results.

   2. Adjustable Parameters: The Mass Index allows traders to adjust key parameters for enhanced customization:

   • EMA Period (Lookback Period): Controls the sensitivity of the moving averages. Shorter periods make the indicator more responsive to recent price changes, while longer periods smooth out volatility.
   • Mass Period (Mass Lookback Period): Determines the number of periods over which the sums of the ratios are calculated, affecting the indicator's overall responsiveness.
   • Setup Level and Trigger Level: Default levels are set at 27 (setup) and 26.5 (trigger), but these can be adjusted based on the volatility of the security.

Interpreting the Mass Index

The "Reversal Bulge" Signal

The primary interpretation of the Mass Index involves identifying a pattern known as the "Reversal Bulge":

1. Setup Phase: The Mass Index rises above the setup level (e.g., 27).
2. Trigger Phase: The Mass Index then falls below the trigger level (e.g., 26.5).

When this pattern occurs, it suggests that a trend reversal may be forthcoming. However, the Mass Index does not indicate the direction of the potential reversal—whether the market will turn bullish or bearish.

Adjusting Levels Based on Market Volatility

Since different securities exhibit varying levels of volatility, the setup and trigger levels may need adjustment:

• High-Volatility Securities: May require higher setup and trigger levels to account for more significant price swings.
• Low-Volatility Securities: May work better with lower levels to detect subtler changes in volatility.

By customizing these levels, traders can improve the indicator's accuracy for the specific market conditions they are trading. Also, because the Mass Index does not specify the direction of the trend change, it is advisable to use it in conjunction with other tools:

Review the screenshots and video for setup options.

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