Market momentum is the change calculated when the total trade volume is multiplied with the index. It can indicate a good change in the market, which might occur in the future. The important fact pertaining to currency momentum is that it not only considers the changes varying in price, but also considers the changes of volume.
The main point of momentum trading is to quickly be able to identify a shift in case of momentum. The presence of various indicators for finding out the shifts in momentum also helps a lot. Also knowing the appropriate technique of entry with the momentum flow can help you get a better trade.
In this kind of a trade, usually the forex brokers and traders are witnessed moving only in one way, particularly where the volume of trade is high. These traders are seen holding their position for some time, which can range anywhere from minutes to even few hours and at times the trades are held even for a complete day. This holding of position entirely depends upon the pace at which the currency moves and whenever it changes its position.
How to go for it?
The key to go for momentum trading is to analyse the charts of the currency market. At first, the trader analyses the list of the so that he is able to make a final decision on which one he has to choose. Some of the technical indicators are also used to find out about momentum.
What is the momentum trader in position?
The thought of whether the trade will move in the same direction of not is always there. Usually in these cases the trader is finding a saturation point of the trade by continuously analysing it.
What are the two famous candlestick patterns?
Pin bar is known to be a quite useful and powerful tool in case of indicating shifts in momentum. Another one is the Double bar high lower close. You will be able to know that momentum shifts are stronger when the price high is followed by the formation of a candlestick. Similarly, witnessing a double bar lower high in case of a downward, this also indicates a shift in the momentum.
It can also be concluded by saying that the changes or the shifts in momentum can be analysed by using technical indicators like MACD, RSI etc.