Inertia Analysis and Inertia Trading Signals

Developed by Donald Dorsey & was originally used to trade Stocks & Commodities market, before traders took it & started trading the market using this technical indicator.

Dorsey chose to name it "Inertia" due to and because of his interpretation of the trend. He claimed that a market trend is the overall result of inertia & thus it takes more force for a trending market to reverse its direction than to continue heading in the same direction. Hence, a market trend is the gauge/measurement of the market inertia. This is an oscillator indicator which uses the scale of zero to a hundred. Signals are generated/derived using the 50 level centerline cross over strategy.

Inertia Indicator - MT4 Inertia Indicator - XAUUSD Inertia Buy & Sell Trading Signals Indicator

In physics, the term Inertia is defined in terms of mass and direction of motion. Using the standard trading analysis, the direction of motion of the trend can be easily defined. However, the mass can not be easily defined. Dorsey claimed the volatility of a financial instrument might and may be the simplest and the most accurate measurement of inertia. This theory led to the use of the Relative Volatility Index RVI as the basis to be used as a trend indicator. Therefore Inertia technical indicator is comprised of: RVI smoothed by a linear regression.

Gold Analysis and How to Generate Signals

In trading the market using this indicator, the trading signals generated are fairly simple to interpret. Below are 2 examples displayed using charts showing how buy & sell signals are generated/derived using Inertia.

Bullish Buy Signal

If the Inertia is above 50, positive inertia is indicated, this thence defines the long term trend as upward as long as the technical indicator remains above 50. When the indicator crosses to levels below 50 then this is interpreted as an exit trade signal. The chart below illustrates and shows an exemplification of how a buy signal gets generated.

Bullish Signal - MT4 Inertia Indicator - Analysis of Inertia Indicator

Upwards Trend - Bullish Signal

Bearish Sell Signal

If the Inertia is below 50, negative inertia is indicated, this therefore defines the long term trend as downward as long as the technical indicator remains below 50. If it goes above 50 then this is viewed as an exit trade signal. The chart below shows how a sell trading signal generated.

Bearish Signal - Inertia Indicators for Intraday Trading - No Nonsense Inertia Indicator

Downward Trend - Bearish Signal

Study More Guides & Tutorials:

Trade Gold Trading

Inertia Analysis and Inertia Trading Signals

Gold Analysis and How to Generate Signals

Bullish Buy Signal

Bearish Sell Signal