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What is a momentum trading system?

What is a momentum trading system?

Momentum trading usually involves long positions in a security that has been experiencing an uptrend and has a high volume of trading, and dropping positions that have lost momentum.

Several systems exist to help take the emotion out of trading and to stick to a theory with rules. Momentum trading is such a system, and it can be automated with help from algorithm. Some indicators that can be used are Rate of Change and Relative Strength Index. Some would identify high momentum as steady price increases bolstered by high trading volume.

Systems will consider the acceleration of the prices and trade volume. Momentum is used for stocks and Forex primarily.

Keywords: #Forex, momentum investing and trading, technical indicators, Relative Strength Index (RSI), rate of change, momentum, emotionless systems, momentum trading system,