The Pace of trade indicator is built to show The Tape Speed on the Floor. Obviously in today's markets we no longer have the Floor, but we have something very much like the floor called "level 2" data which allows us to see inside the data. In other words, most people think price is the the ultimate leading indicator but the truth is price does not change randomly, price changes by the BID and ASK quantity.
The Pace of the Trade indicator show the Velocity (speed) of the tape and allows you to see the speed at which the BIDS are being HIT and the speed at which the OFFERS are being lifted.
When you understand how Velocity works... it shows when a market is changing direction (because in order to change direction the velocity slows down) AND when a market is in FULL FORCE and ready to continue moving in the current direction. Back in the day (on the Floor), the "ROAR OF THE FLOOR" had a certain FEEL to it or Intensity and traders could Gauge the acceleration or deceleration by the Roar. Simply put, the direction could be detected by the speed and decibels of the Roar.
Up to now, I have never seen an indicator based on the ROAR OF THE FLOOR, but with the MPace indicator, you can now see the acceleration or deceleration of a move to know when it's time add-on or drop off to the PACE OF TRADE.
Most floor traders that have moved to the screen miss cues they used to get while trading on the floor. Hearing and feeling the noise and frenzy of a heated market is a big one of them. The MPace Indicator lets you SEE that frenzy on your screen. If you are a momentum trader, you want to be in on that move.
One key element of the MPace indicator is that it works especially well on intraday time based charts. The examples below illustrate it in action.
Example 1: Nasdaq - 1 Minute Chart
Example 2: Crude Oil - 2 Minute Chart
Example 3: Gold - 1 Minute Chart
Example 4: FOREX - EUR/USD 1 Minute Chart
Example 5: FOREX - GBP/JPY 1 Minute Chart