Fading the momentum move, does it even really work? | Forex Factory

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Fading the momentum move, does it even really work?

  • #1
  • First Post: Feb 22, 2022 9:38pm Feb 22, 2022 9:38pm
So many times i came across these concepts in this forum,
"when price fall dramatically it creates a liquidity gap. these gaps in price always get filled sooner or later."

so i tried these for a considerable amount of time.
#looking for a momentum move either side go without much opposition.
#Price slows down, seeing corrective waves against the prior momentum direction.
#then i see momentum from the opposite side, i look for my entry.

It worked sometimes, but majority of the time all it does is moving against me fast leaving me into deep mud.

Now im in deep confusion that this concept is even valid. Trying to catch the fading momentum, is this good idea?
Anyone here do this and winning consistently? or am i just throwing punches in the dark!
what am i doing wrong/
  • #2
  • Feb 23, 2022 1:30am Feb 23, 2022 1:30am

the gap thing. here. again.
Maadik Hugiis. IQ 69.
  • #3
  • Feb 23, 2022 5:16am Feb 23, 2022 5:16am
Quoting Glaucus
So many times i came across these concepts in this forum, "when price fall dramatically it creates a liquidity gap. these gaps in price always get filled sooner or later." so i tried these for a considerable amount of time. #looking for a momentum move either side go without much opposition. #Price slows down, seeing corrective waves against the prior momentum direction. #then i see momentum from the opposite side, i look for my entry. It worked sometimes, but majority of the time all it does is moving against me fast leaving me into deep mud. Now...
Hi Glaucus ! Hope you are well. The basic "concept" alone means nothing in trading as successful trading relies on many factors. So yes, with a principle alone, of course you are punching in the dark. There are countless strategies of this kind. Posting real examples of the trades you are referring to, and all analysis surrounding it, would surely get more attention and perhaps even worthy feedback. Cheers !
If I don't mention SL and/or TP = longer-term setup possibly in the works!
  • #4
  • Feb 23, 2022 10:52am Feb 23, 2022 10:52am
Quoting Glaucus
So many times i came across these concepts in this forum, "when price fall dramatically it creates a liquidity gap. these gaps in price always get filled sooner or later." so i tried these for a considerable amount of time. #looking for a momentum move either side go without much opposition. #Price slows down, seeing corrective waves against the prior momentum direction. #then i see momentum from the opposite side, i look for my entry. It worked sometimes, but majority of the time all it does is moving against me fast leaving me into deep mud. Now...
Same with any 'setup'. The magic isn't in the setup, the magic is in the trader having the ability to choose the 5% of all situations where their setup will actually work.

If you were to code the parameters of any retailer setup into an algo bot, that bot would hemorrhage cash, most of the time.

But that same setup in the hands of the trader who developed it and has a track record of making money with it, is a different matter altogether.

This is why I don't understand (or am even highly suspicious off) those who guard their 'setup' as though it were some kind of magic formulae. The setup itself is next to fuck all. 5% of the story if even that. The real 'setup' exists ingrained in the traders subsconscious mind, trained from thousands of hours of market experience and routinely sabotaged by the traders evolutionary implanted emotional responses.
  • #5
  • Feb 23, 2022 11:57am Feb 23, 2022 11:57am
Quoting Glaucus
when price fall dramatically it creates a liquidity gap
Hi Glaucus!

1. What is dramatically? -1%? -15%? How much it must fall for drama?
2. What is liquidity gap? How you calculate it? How much? 1 lot? 100 lots?

When large movement occur big player removes the liquidity from the market, that is true. The problem here I see is that there are no math involved in the calculation, but some strange variables like "dramatically" and "gap".
Observer effect
  • #6
  • Feb 24, 2022 6:17am Feb 24, 2022 6:17am
Mind the gap
  • #7
  • Feb 24, 2022 8:30am Feb 24, 2022 8:30am
Hi guys thank u all for replies. sry for the late reply. to clarify what i mentioned before i'm posting some charts.
so this is what i basically look in the chart.
the yellow circle is what i meant liquidity gap.
i see a move like in yellow, such a strong moves up without significant resistance.
i look for compression while price rising like in the white box. which in my terms means that sellers are coming in. A change in prior behavior.
I look for sell entry.
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  • #8
  • Edited 12:09pm Feb 24, 2022 8:37am | Edited 12:09pm
In this chart you can see the change in price behavior clearly in white box.
sellers pushing price down even though buyers giving a tough fight.
at some point (in the white box) sellers failed to print a lower low. so after this i look to enter buy.
Attached Image (click to enlarge)
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  • #9
  • Last Post: Feb 26, 2022 7:17am Feb 26, 2022 7:17am
Quoting Glaucus
i look for compression while price rising like in the white box. which in my terms means that sellers are coming in. A change in prior behavior.
What makes you think that it's a change in prior behavior? What if it's a continuation? Why does price move the way it does? There is always a reason. Think of a more straightforward market, like real estate for example. Create your model with something much easier to understand. That model will work on any market with a price on it.

Gaps are very real. Keep pushing on this path
Focus, Patience, Determination & Order in chaos
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