The Momentum Trading Strategy for Forex & CFDs

Published on July 7, 2022

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One of the key tenets of technical analysis is that price frequently lies, but momentum generally speaks the truth.

Momentum trading is a strategy that aims to capitalize on the continuance of existing trends in the market. The momentum investor believes in spotting large price movements.

A steady increase in the speed at which price is rising or falling suggests trend strength

However, too rapid an acceleration is often interpreted as a sign of ‘trend exhaustion’ or a ‘blow-off’ top (or bottom for downtrends) that suggests a final dramatic surge in optimism (or pessimism for downtrends) that drains out the remaining buyers (or sellers for downtrends) and sets up the end of a trend and coming trend reversal.

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The Momentum Trading Strategy for Forex & CFDs

Forex Momentum Trading En, The Momentum Trading Strategy for Forex & CFDs.

Popular Momentum indicators

Momentum traders aren’t necessarily worried about the fundamentals of the underlying property– such as its long-term development prospects as well as the economic situations surrounding it. All Momentum Trading investor generally cares about is price action. This is why most Momentum traders count heavily on technical analysis as well as indicators to establish when to go into as well as leave each profession.

Popular Momentum indicators include:

The Momentum indication

The Closely Equal strength index (RSI).
Moving averages.
The stochastic oscillator.

Momentum trading summed up.

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