Momentum

From Traderpedia

Revision as of 11:54, 12 September 2005 by Rhody Trader (Talk | contribs)
(diff) ←Older revision | Current revision (diff) | Newer revision→ (diff)
Definition:
1) The impetus of a directional movement, or 2) A technical indicator used to measure directional impetus 3) A style of trading where one looks for increased impetus as an entry signal.


Momentum can refer to a number of things in regard to trading.

Firstly it can refer to 'momentum' as the impetus, or increased activity of an item - such as a stock or index. This can be referred to as gaining momentum or losing momentum

Secondly it is a type of indicator that can be added to a chart as part of technical analysis - See Momentum Indicator, which measures the amount of impetus or activity in a stock or index and shows it growing or waning. There are also other types of momentum indicators such as the Relative Strength Index or the Stochastic Momentum Indicator.

Third it can refer to a type of trading or investing, where traders look for an increase in the momentum of a stock or index as an entry point for their trade.