REM Algo

Risk Evaluated Momentum Algo (REM Algo) is a swing-trading indicator intended for liquid equities that exhibit strong momentum on 1h chart. It measures trend strength + momentum persistence and converts that into actionable signals (entry, exit, and optional early profit-taking), while also plotting dynamic risk boundaries (stop/take-profit levels) that adapt to the symbol’s behavior.

This is an invite-only script because its edge comes from a specific multi-layer scoring and normalization process (described below) and a set of tuned defaults and filters designed to behave consistently on the 1h timeframe.

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Added Value: What’s Unique About This Indicator

1. Multi-horizon momentum scoring
   
   REM builds a composite “momentum state” by combining multiple EMA relationships across different horizons and then normalizes that output so it can be compared against dynamic risk levels on a per-symbol basis.
   
   
2. Gap / discontinuity handling
   
   Equities often have overnight gaps and earnings-driven discontinuities. REM includes an adjustment layer intended to reduce the distortion those gaps create in standard momentum measures (where a single gap can “fake” strength/weakness for multiple bars).
   
   
3. Dynamic risk framework integrated into the signal engine
   
   The plotted Stop Loss and Take Profit levels aren’t decorative. They are derived from the same REM state/normalization process and are used to:
   
   • define “maximum tolerated weakness” during a trade,
   • define “exuberance” zones where chasing is statistically worse,
   • optionally trigger earlier profit protection.
   

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How It Works

REM Algo produces a REM value each bar:

1. Base momentum core (EMA structure)
   
   Multiple EMA relationships are evaluated across short and medium horizons to characterize:
   
   • direction (trend bias),
   • momentum (rate/persistence),
   • quality (alignment vs. conflict between horizons).
   
   
2. Symbol normalization
   
   The result is transformed into a normalized oscillator so that values have comparable meaning across different tickers (i.e., avoiding “this stock is always high/low” behavior).
   
   
3. Gap/discontinuity adjustment
   
   Bars impacted by discontinuities (e.g., open vs. prior close) are handled so the REM state is less likely to overreact to a single jump and then lag for hours afterwards.
   
   
4. Dynamic thresholds (risk boundaries)
   
   Using the REM distribution and recent behavior, the script derives:
   
   • Zero Line: neutral boundary between strength/weakness regime
   • Stop Loss Line (red): weakness boundary used for trade invalidation
   • Take Profit Line (gray): exuberance boundary used for profit protection
   

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What Is Plotted

1. REM line (zigzag)
   • Green when REM > 0 (strength regime)
   • Red when REM < 0 (weakness regime)
   
   
2. Dynamic Stop Loss Line (red)
3. Dynamic Take Profit Line (gray)
4. Dashed Zero Line

ibb.co/7dq7VpJV
[Image: REM Overview — indicator + lines]

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Signals and How to Interpret Them

Signals can appear intrabar while the hour is forming, but alerts are confirmed on hourly checkpoints (see next section).

1. Green Cross — Entry / Buy setup
   A Green Cross appears when the REM state transitions from weakness → strength and the underlying EMA/momentum structure is sufficiently aligned.
   
   Use it as:
   • a long entry trigger, or
   • a watchlist alert to evaluate the chart context.
   
   ibb.co/pjwNTQTY[Image: Green Cross example]
   
   
2. Red Cross — Exit / Sell
   A Red Cross indicates the REM state is shifting into weakness.
   Importantly: REM may dip below zero before an exit is warranted; the Stop Loss Line represents the “line in the sand” where weakness is no longer acceptable for that trade.
   
   Use it as:
   • an exit point on a profitable trade
   • a dynamically calculated stop loss exit point
   
   ibb.co/DDxCzHt9[Image: Red Cross example]
   
   
3. Gray Cross — Take Profit Sooner (optional)
   When REM moves above the Take Profit Line, it’s treated as an “exuberance” condition (strong run / higher mean-reversion risk).
   
   A Gray Cross prints when REM falls back below that take-profit boundary.
   
   If Take Profit Sooner is enabled, the Gray Cross becomes an earlier profit-protection exit rather than waiting for a Red Cross.
   
   ibb.co/n8bgkp0Q[Image: Gray Cross example]
   

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Alerts (designed to reduce “fake-outs”)

Because REM is computed in real time, intrabar conditions can briefly meet criteria and then revert. To reduce false triggers, REM Algo confirms alerts at fixed hourly checkpoints.

Hourly confirmation window (US market hours):
• Alerts confirm on the hourly close checkpoints from 10:30 AM to 3:30 PM ET
(i.e., it avoids the opening hour behavior and focuses on more stable intraday structure).

Automation-friendly alerts
• The script provides pre-formatted alert templates designed to work with automation tools (e.g., TradersPost), but you can also supply custom alert text for your own workflow.

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Optional Risk Controls

Close Positions Before Earnings (earnings blackout)

If enabled:
• No new buys on the day before earnings
• If in a position, the script can issue a close alert at ~3:30 PM ET the day before earnings
(aim: reduce exposure to earnings gap risk).

Take Profit Sooner

If enabled:
• Uses Gray Cross logic (drop back below Take Profit Line) as an earlier profit-protection signal.

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Recommended Use

Best fit
• Liquid equities that exhibit strong momentum on 1h chart
• Stocks with market cap generally above $5B and price above $1 and with sufficient liquidity (avoid thin names where gaps/spreads dominate behavior)

Not designed for
• low-liquidity penny stocks,
• symbols where price behavior is dominated by single prints or irregular sessions.

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RISK DISCLAIMER

This indicator provides signals and risk-management structure, not guarantees. The inherent risks involved with trading and investing in the markets, include the loss of your investment. REM Algo and all content, tools, scripts, articles, and education provided by Zen Algorithmics are for informational and educational purposes only. Past performance is not indicative of future results.