Momentum

Momentum

The amount of acceleration of an economic, price, or volume movement. A trader that follows a movement strategy will purchase stocks that have recently risen in price.

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Momentum

The likelihood of a price movement to sustain itself. For example, if a price for a security begins to increase, momentum is its likelihood to continue to increase. There are various ways to measure momentum, but most involve volume in some way. Generally speaking, a gain or loss on high trading volume tends to indicate that the movement has momentum and is likely to continue.

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momentum

The tendency of a security to continue movement in a single direction. Momentum is the underlying factor in trend analysis of stock prices.

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Momentum

What Does Momentum Mean?

The rate of acceleration of the price or volume of a security.

Investopedia explains Momentum

Once a momentum trader sees acceleration in a stock's price, earnings, or revenues, that trader often will take a long or short position in the stock with the hope that its momentum will continue in the current direction. This strategy relies more on short-term movements in price than on a company's fundamentals; it is not recommended for novice investors.

Related Terms:
• Downtrend
• Moving Average Convergence Divergence
• Swing Trading
• Trend Analysis
• Uptrend