This trading system uses momentum to find entries and exits. We also look to align the momentum with earnings and dividends as these can help the stock outperform over the short term.
Definition of ‘Momentum’
The rate of acceleration of a security’s price or volume. The idea of momentum in securities is that their price is more likely to keep moving in the same direction than to change directions. In technical analysis, momentum is considered an oscillator and is used to help identify trendlines.
Once a momentum trader sees acceleration in a stock’s price, earnings or revenues, the trader will often take a long or short position in the stock in the hope that its momentum will continue in either an upward or downward direction. This strategy relies on short-term movements in a stock’s price rather than fundamental value, and it is not recommended for novices. www.investopedia.com
- The stock going ex-dividend the next day
- Momentum has dropped below a set threshold
This system is designed to be traded with leverage. The reason for using leverage