Video tutorial: trading with ‘momentum’

Welcome to my latest spread betting video tutorial. This week, I want to deal with ‘momentum’. And how you can use momentum measures for spotting changes in the direction of a market.

Momentum is one of the most basic of all technical indicators, and appears on almost every spread betting platform. In short, it’s a way of measuring the strength of a trend, which can be either up or down. Yet momentum is a formidable methodology for making trades at low risk, and also for exiting profitable trades.

In this video, I will explain:

• What momentum measures;

• A simple way to use momentum, and how it provides solid clues for spotting looming changes in a trend. In turn, this will give you the most potential for making large gains;

• How to combine momentum with other trading methods

• If you’re a new reader, or need a reminder about some of the methods I refer to in my trades, then do have a look at my other introductory videos:

The essentials of tramline trading

Advanced tramline trading

An introduction to Elliott wave theory

Trading with Fibonacci levels

• Don’t miss my next trading insight. To receive all my spread betting blog posts by email, as soon as I’ve written them, just sign up here.

7 Responses

  1. 01/11/2011, KenN wrote

    Many thanks again for a clear and simple explanation of another component of your trading technique!

  2. 02/11/2011, Simon wrote

    I would also like to thankyou for another great video which helps to clarify your excellent emails.

    As someone who is new to trading I would be interested to know how often you trade and on average how many positions you hold at any one time,because this seems to me to be important. Perhaps you could cover tis in one of your future emails.

    Many thanks.

  3. 03/11/2011, Paul wrote

    I appreciate these useful blogs.
    I often get stoppped out so I wonder what the accepted stop loss is and does it vary with time period.
    Thanks

  4. 03/11/2011, Paul wrote

    I appreciate these useful blogs.
    I often get stoppped out so I wonder what the accepted stop loss is and does it vary with time period.
    Thanks

  5. 04/11/2011, Robin wrote

    Thanks for these videos, one correction though. Momentum isn’t just the 12 day average of the closeof the period, that would just be a moving average. To make it an oscilator it’s actualy the current close minus the average of the previous x day period or the current close divided by the previous average multiplied by 100. That’s why it’s useful, it gives you a relative view of how big the current move is relative to the previous x day average movement.

  6. 11/11/2011, Padraig wrote

    John,
    Many thanks for your excellent presentation.
    Can you tell me if momentum is the same as RSI?
    Your platform looks to be the IG one; I also have it but cannot find momentum on the IG platform.
    Keep up the great work.
    Padraig

  7. 15/12/2011, Dharmesh wrote

    Very easily understood explanations and great commentary.

    how often should one be looking to spot either the Elliott wave theory or A-B-C pattern?

    regards

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