Traders Toolbox: Momentum

MarketClub is known for our "Trade Triangle" technology. However, if you have used other technical analysis indicators previously, you can use a combination of the studies and other techniques in conjunction with the "Trade Triangles" to further confirm trends.

Momentum measures the change in a commodity's price with time. M = Pc-Pn where M = momentum, Pc = current period's price and Pn = price n periods ago.

The length of time used for the prior period is a matter of personal preference and time horizon of the trader. A narrow window of less than five periods back would be short-term in nature while six to nine periods would be considered intermediate; 10 or more would be a longer time perspective.

The most common value is 10 periods prior. Momentum is positive if today's price is higher than your past period's price and negative if not.

Momentum indicators give their best trading signals when they diverge (go in the opposite direction from prices). There are two types of divergences – bullish and bearish.

Bullish divergence occurs as price falls to a new low while the oscillator refuses to set a new low. This often signals the end of a downtrend.

Conversely, a bearish divergence occurs when price reaches new highs and the indicator doesn't confirm it by also reaching new highs.

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You can learn more about Momentum by visiting INO TV.

9 thoughts on “Traders Toolbox: Momentum

  1. Govinkgd,

    The reason most traders fail either in stocks or in commodities is because they do not have a game plan. Trading without a game plan in my opinion is the equivalent of going on a road trip with no road map or GPS to get you to where you are going.

    Once traders create a working game plan they are well on the way to understanding how the markets work and becoming successful.

    All the best,
    Adam

  2. sir
    I understand the concept of momentum and triangles. A triangle can always be drawn when ever there is peak or apex you call. But no body can predict at which point the peak forms.
    I am absolutely wrong in making a statement that neither the fundamentals nor technicality work in stock market. If it works then why a particular stocks falls immediately when there are no external and internal factors of a company changes?
    It is the brokers do all magic. and the make the people fool around. otherwise why only 5%of the traders get benefit and 95% fail
    with regards
    govind

  3. Age does not have to dictate whether you can learn.. I'm nearly 88 and find time every day for diligent study of market-related information, much of it is free, and I also pay for several.. Just dig in with intention. You are NOT "lazy" whatever that term means.. You may just be fearful - - just jump in and give it your focus..

  4. Hey Jacob,

    I agree that you can never be too old for the markets. I mean, if you don't hear someone say that they feel they're too young for the markets, I really think that it means age has anything to do with it. Young and old both have their own advantages and disadvantages. After all, while enthusiasm and strength are probably virtues that the young have, wisdom and patience are virtues that the elder have. So keep your chin up and trade smart, irrespective of your age! 🙂

  5. What works best is to combine technical indicators and also fundamental analysis to choose your trades. When you can then find oversold stocks that are in stage I (basing) that are almost going to stock stage II you can make some nice profits.

    Marketclub does a great job to identify these. Look for monthly green triangles in stocks that are at there low. Also choose a sector that is hot at the moment. Like gold/silver mines,...

    To get some ideas you can check out our free site. Some of our ideas that work out fine are added every week.

    And we are also always learning new things and improve our trading, like Ione said, you are never to old to learn. And I love to learn new things to better my trading.

  6. Hey Jacob, you are NEVER too old. The only thing stopping you is being lazy. Learn what's being taught here and similar websites and you can do very well.

  7. Well, all of these technical indicators work fine
    when market is stable and somehow predictable, more or less. Longer time is better for these indicators for smoothing the curve and making better predictions. Day trading does not really work now for the ordinary trader, who is not well
    connected and works from home on-line.
    Now, at present time, it is extremely risky to
    assume anything and rely on the technical indicators, in particular, since in times like this the histeria is running very hi, VIX is the highest for a long time, and therefore just ordinary stock market investment, whether based
    upon technical indicators, or fundamental data (which might be easily made up), is highly risky. Side line might be a good option, until the economy and market come to balance.

  8. very good teaching material for novices like me,
    only,it's too late,I'm too old (72).

    Thank you for everything, best regards from the
    hollyland, Jacob.

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