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Momentum

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The Momentum is an oscillator that looks the absolute variation between two closures in a given period. The indicator implies, by its construction by differences, the concept of speed of acceleration, an indicator in advance is therefore considered. I.e. it presents its anticipation of the price chart.

What is the use? It measures the force with which raises or lowers the share price in the period determined. It allows establish in that phase of the movement is the value: Ascending accelerating Ascending slowing Descending accelerating Descending slowing Serves to perform analysis of divergences.

How is it used? Use as default parameter the 10-session period. It is an oscillator that is not standardized, does not always move in the same range, so you have to keep in mind is your address and their relative position and not its value. It is calculated by direct subtraction of the last closing value against the closure of n days, where n is the value of the period. It can be used to originate buy signals when it crosses the line up of 0 and sell signals when it crosses down the 0 line. It is most useful in their anticipation in turns that occur in the price chart that normally will be alerted with a divergence. Tips of Trading: Use the moment as an oscillator to determine overbought or oversold, using two standard deviations above their maximum values and two standard deviations calculated on the minimum values achieved. These levels plotted as horizontal lines we mark the overbought and oversold areas where they are most likely the swings in price. A trading system that generates signals to the crossing point with the line 0 filtering with a moving average so that the buy signals are valid when cutting occurs when above the 0 line and prices above the moving average. The sell signal is the crossing point below the 0 line and prices below the moving average.

Example Image Momentum in the Metatrader platform

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Erick Gálvez
Author: Erick GálvezWebsite: http://www.asdforex..comEmail: This email address is being protected from spambots. You need JavaScript enabled to view it.
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ASDForex manager and professional trader since 2008. I am also Aleforex.com manager where you can view the services that I give
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