Mass Index

The Mass Index is a volatility indicators indicator used in Skyrexio Strategy Builder for volatility assessment and risk management.

Introduction

The Mass Index is a reversal identification indicator that provides trend change signals for both LONG and SHORT strategies through range analysis. This unique indicator analyzes the relationship between high-low ranges to identify potential reversal points by detecting when the range between highs and lows changes significantly, making it excellent for identifying trend exhaustion and potential turning points.

How Mass Index Works

Mass Index was developed by Donald Dorsey to identify potential reversal points by analyzing the relationship between high-low ranges. It uses a 25-period sum of 9-period EMA of high-low range divided by 9-period EMA of that same value, creating a unique volatility-based reversal indicator.

• Reversal identification - Mass Index > 27 suggests potential trend reversal • Trend continuation - Mass Index < 26.5 indicates current trend likely to continue • Volatility expansion - Rising Mass Index shows expanding volatility before reversals • Range analysis - Focuses on price ranges rather than closing prices • Trend exhaustion - Identifies when trending moves are losing momentum

Range-Based Psychology: Mass Index focuses on the relationship between highs and lows rather than closing prices, making it unique among technical indicators. When this relationship changes dramatically (Mass Index > 27), it suggests that the market's internal structure is shifting, often preceding significant trend changes. This makes it particularly valuable for identifying reversal points.

Key Characteristics

Attribute	Details
Category	Volatility Indicators
Type	Reversal Identification & Trend Exhaustion
Primary Use	Trend reversal signals, continuation confirmation
Timeframe	All timeframes supported (1m to 1M)
Confirmation	Volume, momentum indicators, price action

Strategy Applications

🟢 LONG STRATEGY (Reversal Entry)

Mass Index is excellent for LONG strategies when it signals potential reversal from bearish to bullish trends, particularly when Mass Index exceeds 27 after a downtrend.

Base Entry Order (LONG)

Trigger Type: Once per bar close
Bar TF: 1H
First Condition: Mass Index
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 27

AND

First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Simple Moving Average (50)
Timeframe: 1H

Additional Entry Orders (LONG)

Additional Entry 1: Mass Index reversal confirmation
First Condition: Mass Index
Timeframe: 1H
Operator: Cross Below
Second Condition: Value
Value: 26.5

AND

First Condition: RSI
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 35

OR

Additional Entry 2: Trend continuation setup
First Condition: Mass Index
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 26.5

AND

First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

AND

First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

Take Profit Orders (LONG)

Rule 1: Exit condition - Mass Index signals new reversal
First Condition: Mass Index
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 27

AND

First Condition: RSI
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 70

OR

Rule 2: Exit condition - Trend strength exhaustion
First Condition: Mass Index
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (10)
Timeframe: 1H

AND

First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (50)
Timeframe: 1H

OR

Rule 3: Exit condition - Volume decline warning
First Condition: Volume
Timeframe: 1H
Operator: Less Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

AND

First Condition: Mass Index
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 26

Stop Loss Orders (LONG)

Rule 1: Stop loss - Mass Index breakdown continuation
First Condition: Mass Index
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 27

AND

First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Simple Moving Average (50)
Timeframe: 1H

AND

First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

OR

Rule 2: Stop loss - Trend breakdown confirmed
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

AND

First Condition: Mass Index
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 25

OR

Rule 3: Stop loss - Momentum breakdown
First Condition: MACD Line
Timeframe: 1H
Operator: Cross Below
Second Condition: MACD Signal Line
Timeframe: 1H

🔴 SHORT STRATEGY (Reversal Entry)

Mass Index is equally effective for SHORT strategies when it signals potential reversal from bullish to bearish trends, particularly when Mass Index exceeds 27 after an uptrend.

Base Entry Order (SHORT)

Trigger Type: Once per bar close
Bar TF: 1H
First Condition: Mass Index
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 27

AND

First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (50)
Timeframe: 1H

Additional Entry Orders (SHORT)

Additional Entry 1: Mass Index reversal confirmation
First Condition: Mass Index
Timeframe: 1H
Operator: Cross Below
Second Condition: Value
Value: 26.5

AND

First Condition: RSI
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 65

OR

Additional Entry 2: Trend continuation setup
First Condition: Mass Index
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 26.5

AND

First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

AND

First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

Take Profit Orders (SHORT)

Rule 1: Exit condition - Mass Index signals new reversal
First Condition: Mass Index
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 27

AND

First Condition: RSI
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 30

OR

Rule 2: Exit condition - Oversold bounce warning
First Condition: RSI
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 25

AND

First Condition: Mass Index
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 26

OR

Rule 3: Exit condition - Volume decline warning
First Condition: Volume
Timeframe: 1H
Operator: Less Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

AND

First Condition: Mass Index
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 26

Stop Loss Orders (SHORT)

Rule 1: Stop loss - Mass Index breakout continuation
First Condition: Mass Index
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 27

AND

First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (50)
Timeframe: 1H

AND

First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

OR

Rule 2: Stop loss - Trend breakout confirmed
First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

AND

First Condition: Mass Index
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 25

OR

Rule 3: Stop loss - Momentum breakout
First Condition: MACD Line
Timeframe: 1H
Operator: Cross Above
Second Condition: MACD Signal Line
Timeframe: 1H

Advanced Strategy Combinations

Multi-Timeframe Mass Index Analysis

Setup

Higher Timeframe Confirmation:

• Daily: Mass Index trend and major reversal signals

• 4H: Mass Index patterns and volatility expansion

• 1H: Mass Index execution signals and confirmations

• 15M: Precise entry timing with momentum

Execution

Mass Index Reversal Strategy

Setup Process:

1. Identify established trend (up or down)

2. Watch for Mass Index rising above 27

3. Look for momentum divergence or exhaustion

4. Execute when Mass Index falls back below 26.5

Execution:

• Base Order: Mass Index reversal signal

• Additional: Momentum and volume confirmation

• Take Profit: Opposite extreme or next Mass Index signal

• Stop Loss: Mass Index continuation above 27

Mass Index Continuation Strategy

Bullish Continuation

Setup: Uptrend with Mass Index < 26.5 Signal: Mass Index confirms trend strength Entry: LONG on pullbacks with Mass Index support Target: Trend continuation until Mass Index > 27

Bearish Continuation

Risk Management Guidelines

Mass Index-Based Position Sizing

Mass Index Level	Position Size	Risk Level	Strategy Type
< 25	Standard (100%)	Low	Trend continuation
25-26.5	Standard (100%)	Normal	Normal trading
26.5-27	Reduced (75%)	Elevated	Caution zone
> 27	Reversal (50%)	High	Reversal only

Mass Index Reliability Factors

High Reliability

✅ Mass Index > 27 in established trends ✅ Volume confirmation of Mass Index signals ✅ Multiple timeframe Mass Index alignment ✅ Momentum divergence with Mass Index signals

Low Reliability

Best Practices

For Reversal Strategies

1. Established trends - Only use Mass Index reversals in clear trending markets

2. Volume confirmation - Ensure volume supports reversal signals

3. Momentum check - Look for momentum divergence with Mass Index signals

4. Multiple timeframes - Confirm Mass Index signals across timeframes

For Continuation Strategies

1. Low Mass Index - Use Mass Index < 26.5 for trend continuation trades

2. Trend alignment - Ensure longer timeframes support trend direction

3. Pullback entries - Enter on pullbacks when Mass Index supports continuation

4. Exit preparation - Prepare to exit when Mass Index approaches 27

Common Mistakes to Avoid

• Ranging markets - Don't use Mass Index signals in sideways markets

• No volume confirmation - Always confirm Mass Index signals with volume

• Wrong timeframe - Use appropriate timeframe for your trading style

• Ignoring trend - Don't ignore the underlying trend when using Mass Index

Market Conditions Analysis

Market Type	LONG Strategy Effectiveness	SHORT Strategy Effectiveness
Strong Uptrend	🔴 Low (until Mass Index > 27)	🟢 High (reversal signals)
Strong Downtrend	🟢 High (reversal signals)	🔴 Low (until Mass Index > 27)
Ranging Markets	🔴 Low (unreliable signals)	🔴 Low (unreliable signals)
High Volatility	🟡 Medium (frequent signals)	🟡 Medium (frequent signals)
Trending + Mass Index > 27	🟢 High (reversal potential)	🟢 High (reversal potential)

Related Indicators

Indicator	Relationship	Link
Average True Range	Alternative volatility measure	Average True Range
Standard Deviation	Statistical volatility measure	Standard Deviation
RSI	Momentum confirmation	RSI
MACD	Trend and momentum confirmation	MACD Line

Conclusion

Mass Index is a unique reversal identification indicator that works equally well for both LONG and SHORT strategies. Its strength lies in identifying potential trend changes before they become obvious in price action.

Key Takeaways

• PRIMARY USE: Trend reversal identification and timing

• SECONDARY USE: Trend continuation confirmation when < 26.5

• ALWAYS: Confirm Mass Index signals with volume and momentum

• REMEMBER: Mass Index > 27 suggests reversal, < 26.5 suggests continuation

Success with Mass Index requires understanding that it's primarily a reversal indicator that works best in trending markets. Use it to identify potential trend changes when Mass Index exceeds 27, and trend continuation when it remains below 26.5.

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