Momentum
Momentum is the tendency of an asset's price to continue moving in its current direction. Momentum trading involves buying assets showing strength and selling (or shorting) assets showing weakness. It's based on the idea that trends persist.
Understanding the Concept
• Measured by rate of change in price over specific periods • Momentum indicators include RSI, MACD, and Rate of Change • Works best in trending markets, fails in choppy markets • "The trend is your friend" encapsulates momentum philosophy
Real-World Example
A stock breaks out of a six-month base on huge volume and gains 20% in two weeks. Momentum traders buy, expecting the strong move to continue. They use trailing stops to ride the trend. When momentum fades (indicated by slowing RSI), they exit. They don't try to predict the top, they follow the strength.
How Strykr Helps
Strykr's AI monitors Momentum signals across 5,000+ assets in real-time. Get instant alerts when significant patterns emerge, with context about market conditions and confluence factors.
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