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MOMENTUM doesn't exist in trading

  • Post #1
  • Quote
  • First Post: Aug 29, 2018 4:37am Aug 29, 2018 4:37am
MOMENTUM doesn't exist in trading.
What does is exist is Buyers, sellers, volatility and liquidity.

Volatility is the degree of variation of a trading price series over time.
Liquidity is how many buyers and sellers have orders in the market.

Volatility can be seen on a chart. -- Often there is no volatility in e/u during Asian session.. thus you get 4 pip hourly candles going sideways.

Liquidity is orders.. or lack of orders. -- if something bad happens like chf dropping its peg to euro.. all the buy orders disappear. and price has to drop to find buyers.

Momentum is a physics term.. product of mass and velocity. Price has no mass... just buyers and sellers.


Often before big news everybody is waiting on the news.. so there is a lack of orders in the market. (lack of liquidty).. When news does come out liquidty jumps... Price will spike to match buyers with sellers. This lack of orders is what causes the spike. until a price is reached where a buyer and seller can agree on the price.

Think about this next time you try to trade momentum and fail..
Maybe you too will start to think in terms of volatility and liquidity.
The only system that will work is one designed by and for yourself.
Wow, why nobody gives any interest in this thread? It's so true
Quoting VuTrongAn
Wow, why nobody gives any interest in this thread? It's so true
Because it's reserve for profitable traders only

Yo let's talk about volatility breakouts, what he said makes sense, there in fact has no mass, just volatility once u understand this and worry not about where the price is headed, u'll soon become profitable.

Why? Well most of the legendary traders doesn't even know where price might go tomorrow or three years later all they understand is when it breaks it breaks
Liquidity + Time = 99% win rate
Quoting remonpilip
{quote} Because it's reserve for profitable traders only Yo let's talk about volatility breakouts, what he said makes sense, there in fact has no mass, just volatility once u understand this and worry not about where the price is headed, u'll soon become profitable. Why? Well most of the legendary traders doesn't even know where price might go tomorrow or three years later all they understand is when it breaks it breaks
Also, volatility is easier to trade than direction.

Let's talk volatility:
Bollinger bands + bandwidth anyone?
Liquidity + Time = 99% win rate
Quoting remonpilip
{quote} Also, volatility is easier to trade than direction. Let's talk volatility: Bollinger bands + bandwidth anyone?
interesting, please explain more
  • Post #6
  • Quote
  • Edited at 7:48pm Jan 11, 2021 11:59am | Edited at 7:48pm
Of course momentum exists in financial markets. It is the strength of PA due to changes in sentiment or an event. You see momentum by witnessing the angle of ascent or descent on the chart of the financial instrument you are watching.
Quoting GEfx
Of course momentum exists in financial markets. It is the strength of PA due to changes in sentiment or an event. You see momentum by witnessing the angle of ascent or descent on he chart of the financial instrument you are watching.
I agree. It is simply the rate of change of the underlying, right now....

While it is true that people sometimes make over reached analogies between financial markets and "newtonian" physics, I dont see how there could not be momentum in financial markets...

If there's momentum and it stops right there, it's simply that it hit a wall of liquidity, not that there was no momentum in the first place!
No tree, it is said, can grow to heaven unless its roots reach down to hell
  • Post #8
  • Quote
  • Edited at 1:24pm Jan 11, 2021 1:06pm | Edited at 1:24pm
The underlying pricing actions of the markets were created by humans. Humans have a bias. Bias creates skewness & skewness is momentum. The price match system & market environment intersection creates it.

Simply measuring the rate of change and transactional vacuum @ the proximity of orders can give you momentum. However, sustainment of that momentum in itself is elastic. So differing directionality of weighted momentums can exist. Like an Asteroid with a wobble in a circular orbit.

The asteroid has multiple things occurring in fact the measurement is never binary it occurs as a merger of measurement dependant on the order of measurement ... which is why everyone can measure momentum differently
Quoting bloodpoodle
Momentum is a physics term.. product of mass and velocity. Price has no mass... just buyers and sellers.
Price has mass. It is volume.
greed and fear
  • Post #10
  • Quote
  • Last Post: Jan 11, 2021 9:50pm Jan 11, 2021 9:50pm
Saying momentum does not exist is the same as saying your traded asset is moving in equal segments and bites all the time

obviously, we know that doesn't happen anywhere in the markets, or we wouldn't have huge run ups or market selloffs, crashes etc.
Your Focus Determines Your Reality
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