Momentum trading forex factory

Momentum indicators in Forex records the speed of prices moving over certain time period. At the same time Momentum indicators track strength and weakness of a trend as it progresses over a given period of time: the highest momentum is always registered at the beginning of a trend, the lowest - at its end point.
Momentum Indicators in Forex.
Accumulative Swing Index (ASI) Advance Decline Ratio (ADR) Aroon Indicator Aroon Oscillator Chande Momentum Oscillator Commodity Channel Index (CCI) Intraday Momentum Index Gravity Linear Regression Slope MA Angle Mass Index Momentum Price Oscillator Random Walk Index Range Indicator Rate of Change (ROC) Relative Momentum Index Relative Strength Index (RSI) Smoothed Indexed Rate of Change (SIROC) Stochastic Stochastic RSI Stochastic Momentum Index Swing Index Ultimate Oscillator Williams %R Williams' Accumulation-Distribution.
How to trade with Momentum Indicators.
With Momentum indicators Forex traders look for controversy between chart prices and Indicator suggestions:
A. directional divergence between the price and momentum signals of a trend's developing weakness.
B. price spikes that occur during weak momentum, are the last warning signals of the trend change.
C. also trend change should be expected during sideways moving prices and controversially strong momentum.
Momentum indicators, such as RSI and Stochastic, are favorite indicators for non-trending markets. Momentum indicators ideally gauge whether the market is overbought or oversold during its non-trending state, and highlight potential reversal points before those actually occur.
trader.
The two best momentum indicators are seems to be Stochastic and RSI. I'd like to learn more about RSI trading please. How to combine those indicators. Also why momentum trading is so popular, what's its importance exactly in. Thank you.
FxIndicators.
Momentum trading in Forex or any other market is all about being able to get in and out of a trade at the right moment - at the moment where market is gaining initial strength/momentum and runs first few miles with great confidence and without looking back. When momentum is decelerating or lost, an uncertainty sets among investors as they try to re-evaluate their chances for further profitable price chasing, and the big nice rallies or sell-offs are slowing down yielding no more profit potentials till the next momentum.
Momentum indicators help to catch that "Here and Now" time to place orders and lock in profits.
It is true that two most popular indicators in Forex remain to be Stochastic and RSI.
Although just one of them will be enough to identify periods of forming momentum in Forex market, you may combine two indicators in order to refer to either one or both of them when expectations for new trading opportunities are high.
The best explanation on combining two momentum indicators could only be possible with a help of a specific Forex trading strategy, so we've found an example for you online from a very reputable site.
and hope you enjoy it!
Whats the exclusive use of momentum indicator, if all i need to see while investing is the trend and the trend indicator do that job very well. Explain the cons of investing without momentum indicators.
FxIndicators.
That's quite easy to explain.
Trend indicators tell which of the trends (up or down) is in place. Trend indicators also tell when the trend changes or is about to change. But, there is one thing trend indicators cannot show - and this is the very moment at which all "powers of a trend" have gathered the momentum to produce a move.
In simple words, it's a situation when, for example, you know that a trend is up, but you don't know whether you should Buy it now or wait till you get a better price. That's where momentum indicators come in handy. Momentum indicators show the very best moment when you can Buy it having the highest odds that the market will move into your favor immediately without looking back.
Also you can rely on momentum indicators to suggest when the "powers of a trend" (or simply the momentum) is weakening. Using this information you can take decisions on either taking quick profits and be out of the trade or review and re-adjust your trading stops.
Without momentum indicators it would be difficult to time trades (specifically entries) precisely, besides there is a chance to enter a trade when the market has made quite a progress and as a result used all its power (lost momentum) and is preparing to retrace to regain it, leaving late newcomers at the tip of a reversal.
how do you know whether a market is trending or not.
FxIndicators.
When the market keeps making higher highs and higher lows - it is trending upwards and the trend is intact.
When the market keeps making lower highs and lower lows - it is trending downwards and the trend is intact.
Any changes in this sequence invites ranging market reaction.
This subject is further addressed in the comments at:
In addition, traders often use Moving averages.
Classic example, Alligator indicator: Alligator. mq4.
When there is a prefect lineup: blue, red, green - there is a trend.
When lines mix up, there is no trend.
The first uptrend is marked with green circle - shows the beginning of a trend, when all 3 moving averages are lined up.
The red circle is the end of the downtrend - when the green moving average crosses over the red moving average, breaking the prefect sequence.
what is the 3 Moving average line? how many days?
FxIndicators.
3 Moving average line consists of 3 MAs with next settings: 13, 8 and 5.
what are the best moving average periods for trading 1 min or 5 mins chart?
FxIndicators.
If you want to see trends on 1 & 5 min, use 20 SMA. Also price would respect 200 EMA.
Smaller moving averages would only "dance" back and forth with price bars without providing any considerable use.
This is the advice I ever get for Forex so far.
LOL at above comment.
I just came accross this site today and was amazed at what I saw. Hmm. Thank you so much for your concern.
What is the best MAs combination for 15m time frame or 30mns?
FxIndicators.
Depends on your goals. Don't be surprised if someone tells you that there is no ideal Moving average or set of averages. Every one of them to some point hits the perfect trade one time and misses on the other.
Check out this page about Moving averages, in particular the paragraph about most common moving averages. You can certainly use those on 15 min or 30 min time frame.
I need some enlightenment on the use of support and resistance points when trading. Please also clarify me on how to actually place your stop loss. For example you may place it at 10 pips away from your position in line with your money management strategy but some times the price will swing to 12 pips thereby stopping you out only for it to swing back up and make much profit. How do you strike a balance between your money management limit and the possibility of the price crossing your limit and swinging back in the opposite direction?
Could you please send/write to me indicator:
Stochastic Momentum Indicator (Index).
I have been able to find its formula for metastock.
100 * ( Mov( Mov(C - (.5 * ( HHV(H,13) + LLV(L,13))),25,E),2,E)/
(.5*Mov(Mov( HHV(H,13) - LLV(L,13),25,E),2,E)))
but i need it for.
dot net sochastic momentum calculatio​n.
Any help appreciated. Thank you.
would you please telling me about which momentum indicators that has highest accuracy in time frame 5 or 15, and also the best parameter setting of it - absolutelly thanks before.

Forex: Keep An Eye On Momentum.
One of the key tenets of technical analysis is that price frequently lies, but momentum generally speaks the truth. Just as professional poker players play the player and not the cards, professional traders trade momentum rather than price. In forex (FX), a robust momentum model can be an invaluable tool for trading, but traders often grapple with the question of what type of model to use. Here we look at how you can design a simple and effective momentum model in FX using the moving average convergence divergence (MACD) histogram.
In real estate, month-over-month figures provide a measure of rate of change, which is what the study of momentum is all about. Much like their counterparts in the real estate market, professionals in the financial markets will keep a closer eye on momentum than they do on price to ascertain the true direction of a move.
Using the MACD Histogram To Measure Momentum.
First invented by Gerry Appel in the 1970s, the MACD is one of the simplest, yet most effective, technical indicators around. When used in FX, it simply records the difference between the 26-period exponential moving average (EMA) and the 12-period exponential moving average of a currency pair. (To learn more, see Trading The MACD Divergence and Basics Of Weighted Moving Averages .) In addition, a nine-period EMA of MACD itself is plotted alongside the MACD and acts as a trigger line. When MACD crosses the nine-period line from the bottom, it signifies a change to the upside; when the move happens in the opposite manner, a downside signal is made.
This oscillation of the MACD around the nine-period line was first plotted into a histogram format by Thomas Aspray in 1986 and became known as the MACD histogram. Although the histogram is in fact a derivative of a derivative, it can be deadly accurate as a potential guide to price direction. Here is one way to design a simple momentum model in FX using the MACD histogram.
1. The first and most important step is to define a MACD segment. For a long position, a MACD segment is simply the full cycle made by the MACD histogram from the initial breach of the 0 line from the underside to the final collapse through the 0 line from the topside. For a short, the rules are simply reversed. Figure 1 shows an example of a MACD segment in the EUR/USD currency pair.
2. Once the MACD segment is established, you need to measure the value of the highest bar within that segment to record the momentum reference point. In case of a short, the process is simply reversed.
3. Having noted the prior high (or low) in the preceding segment, you can then use that value to construct the model. Moving on to Figure 2, we can see that the preceding MACD high was .0027. If the MACD histogram now registers a downward reading whose absolute value exceeds .0027, then we will know that downward momentum has exceeded upward momentum, and we'll conclude that the present set-up presents a high probability short.
If the case were reversed and the preceding MACD segment were negative, a positive reading in the present segment that would exceed the lowest low of the prior segment would then signal a high probability long.
What is the logic behind this idea? The basic premise is that momentum as signified by the MACD histogram can provide clues to the underlying direction of the market. Using the assumption that momentum precedes price, the thesis of the set-up is simply this: a new swing high in momentum should lead to a new swing high in price, and vice versa. Let's think about why this makes sense. A new momentum swing low or high is usually created when price makes a sudden and violent move in one direction. What precipitates such price action? A belief by either bulls or bears that price at present levels represents inordinate value, and therefore strong profit opportunity. Typically, these are the early buyers or sellers, and they wouldn't be acting so quickly if they didn't believe that price was going to make a substantive move in that direction. Generally, it pays to follow their lead, because this group often represents the "smart money crowd".
However, although this set-up may indeed offer a high probability of success, it is by no means a guaranteed money-making opportunity. Not only will the set-up sometimes fail outright by producing false signals, but it can also generate a losing trade even if the signal is accurate. Remember that while momentum indicates a strong presence of trend, it provides no measure of its ultimate potential. In other words, we may be relatively certain of the direction of the move, but not of its amplitude. As with most trading set-ups, the successful use of the momentum model is much more a matter of art than science.
Looking at Entry Strategies.
Sometimes price will retrace against the direction signal to a far greater degree than expected and yet the momentum signal will remain valid. In that case, some skilled traders will add to their positions - a practice that some traders have jokingly termed "SHADDing" (for "short add") or "LADDing" (for "long add"). For the novice trader, this can be a very dangerous maneuver - there is a possibility that you could end up adding to a bad trade and, therefore, compounding your losses, which could be disastrous. Experienced traders, however, know how to successfully "fight the tape" if they perceive that price offers a meaningful divergence from momentum.
Placing Stops and Limits.
As Kenny Rogers once sang in "The Gambler", "You've got to know when to hold them, and you got to know when to fold them". In trading, as in poker, this is the true skill of the game. The simple momentum model we've described here is one tool that we hope will help currency traders improve their trade selection process and make smarter choices.

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Momentum Trading.
Momentum trading is a particularly popular approach to forex. Momentum trading is a strategy that aims to capitalize on the continuance of existing trends in the market.
The momentum investor believes in spotting large price movements.
These large and regular movements come from trading psychology. Traders simply react, or don’t react, to important events in the news or economic world.
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The result is that they move in a group in a single direction, and this has a lot of money moving in the same way – it pushes the market in a given direction, and creates momentum.
Momentum strategy works best in ranging markets. A certain duration is required in order to establish a trend.
There are a large number of momentum indicators to choose from: For example, the Awesome Oscillator or the Intraday Momentum Index are both well-known. All of these work on essentially the same principles.
Various oscillators are calculated by different formulas, but they are all based on the relationship of the current price to previous prices for a specified period of time. The theory is that a change in momentum tends to lead to a change in price.
Oscillators are used to help determine whether a price movement will become a trend: Will it be sustained, or has it finished, and is it likely to reverse?
There are different types of momentum values to interpret. When momentum values are positive and rising, one can assume that prices are rising, indicating that buyers are supporting a rise in price over the trend.
When values are slowing, the trend is moving to a close. When values are falling, prices are falling, and sellers are moving together to support a drop in prices.
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