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.
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.