Momentum

Description

The Momentum indicator compares where the current price is in relation to where the price was in the past. How far in the past the comparison is made is up to the technical analysis trader. The calculation of Momentum is quite simple (n is the number of periods the technical trader selects): The current price minus the price n-periods ago.

Hence, if the current price is higher than the price in the past, then the Momentum indicator is positive. In contrast, when the current price is lower than the price in the past, then the Momentum indicator is negative.

Trading Strategy

A buy signal is produced when the Momentum Oscillator crosses above zero. A sell signal is produced when the indicator crosses below zero.