Momentum indicator is an excellent assistant in trading!

Momentum indicator is one of the simplest and most effective technical analysis tools used by traders in trading. The oscillator is a leading trend indicator, the operation of which is based on the difference between the current price and the price several periods earlier.

Preparing for trading on the Momentum indicator

We look for the Momentum indicator in the Insert menu – Indicators – Oscillators – Momentum

First of all it’s worth to set its basic parameters to work with the indicator. In the properties in the Settings tab, change the period to 18.

Further in the properties, in the tab, add levels; add level – 100 and click OK.

Now the indicator is ready for operation. Also, for trading, you need to add a moving with the parameters that you see in the figure below.

 

Trading on the Momentum indicator

Now that all the instruments are configured, we proceed directly to the trade.

Deal for buy

We enter the deal for buy when Momentum crosses the level 100 from the bottom up and the tail of the indicator looks upward, while the price chart also crosses the moving from the bottom up, the candlestick closes above the moving. And at the opening of the next candlestick we enter the market. We set Stop Loss 5 points below the previous low, Take Profit is equal to the size of Stop Loss.

Deal for sale

We enter the deal for sale when Momentum crosses the level 100 from top to bottom and the tail of the indicator looks downward, while the price chart also crosses the moving from top to bottom, the candlestick closes below the moving. And at the opening of the next candlestick we enter the market. We set Stop Loss 5 points above the previous high, Take Profit is equal to the size of Stop Loss.

Cons and pros of the trading strategy

The only disadvantage of the trading strategy is the equal ratio between loss and profit, which increases the risks in this trading system. But, nevertheless, the advantages of this strategy are significantly higher the only minus. The strategy works in any direction of the market, which allows you to make a significant number of transactions, which in turn increases a potential profit significantly. The second significant advantage is that 70% of transactions are closed with profit, due to which, in the final result, the profit is twice the loss.

Take a training course with specialists from Еster Holdings Inc. if you want to learn more about trading on the Momentum indicator.

Alexander Sivtsov