Momentum

What is 'Momentum'

Momentum is the rate of acceleration of a security's price or volume. The idea of momentum in securities is that their price is more likely to keep moving in the same direction than to change directions. In technical analysis, momentum is considered an oscillator and is used to help identify trendlines.

BREAKING DOWN 'Momentum'

Once a momentum trader sees acceleration in a stock's price, earnings or revenues, the trader will often take a long or short position in the stock in the hope that its momentum will continue in either an upward or downward direction. This strategy relies on short-term movements in a stock's price rather than fundamental value, and it is not recommended for novices.

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    Learn to differentiate between trend and momentum, two seemingly similar concepts central to the understanding of technical ... Read Answer >>
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    Read about some of the most common technical momentum oscillators that options traders use, and learn why momentum is a critical ... Read Answer >>
  3. What technical tools can I use to measure momentum?

    One of the main goals of every trader using technical analysis is to measure the strength of an asset's momentum and the ... Read Answer >>
  4. What are the best technical indicators to complement the Dynamic Momentum Index?

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