40+ Year Old Momentum Trading Concept Using thinkScript

Read More Vids Top Searched Momentum Trading Formula, 40+ Year Old Momentum Trading Concept Using thinkScript.

In 1978, Wilder created a Momentum Concept to help predict when price is likely to start accelerating or decelerating. We’ll translate this 40+ year old concept into a ThinkOrSwim indicator and scan, using thinkScript code.

For those interested, here’s a link to read the book – New Concepts in Technical Trading Systems (pg. 53): https://books.mec.biz/tmp/books/218XOTBWY3FEW2CT3EVR.PDF

The basis of the momentum concept is tracking a value which Wilder calls the “Momentum Factor.” The momentum factor is the difference between the closing price today, compared to the closing price two days ago.

The difference in values there helps to get a quick gauge as to whether or not price is decelerating, compared to where it has been. There are more rules and nuances, which we will discuss in this tutorial.

Here’s the final version of the indicator and scan:

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⏱️ Here are video timestamps that might come in handy:

0:00 – Introduction
1:44 – What is the Momentum Concept and Factor?
6:48 – Building a ThinkOrSwim Indicator
16:36 – Translating the Momentum Concept into a Scan
21:44 – Conclusion

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Momentum Trading Formula, 40+ Year Old Momentum Trading Concept Using thinkScript.

Exactly how do short term traders earn money?

One means to earn money on supplies for which the rate is dropping is called brief selling (or going short). Short selling is a fairly basic concept: a financier obtains a supply, offers the stock, and then purchases the stock back to return it to the lender. Short vendors are wagering that the stock they offer will certainly drop in rate.

What Is Momentum Investing?

Momentum investing entails a method to take advantage of the continuance of an existing market trend. It entails going long supplies, futures or market ETFs revealing upward-trending costs and brief the respective properties with downward-trending costs.

Momentum investing holds that fads can linger for some time, and it’s possible to profit by remaining with a fad till its final thought, no matter the length of time that may be. As an example, Momentum investors that went into the UNITED STATE stock exchange in 2009 typically delighted in an uptrend till December 2018.

Can anybody short a supply?

The key risk of shorting a supply is that it will actually boost in value, causing a loss. The prospective rate gratitude of a supply is theoretically unlimited and, therefore, there is no limit to the prospective loss of a brief placement. Naked brief selling is the except supplies that you do not own.

Sumed Up

Momentum is an essential concept that has shown useful for determining the chance of a successful trade. Dimensions of Momentum can be utilized in the brief and long term, making them beneficial in all types of trading methods. Numerous technical trading devices are readily available to expose the stamina of fads and whether a profession on a specific property may be an excellent bet.

Nevertheless, traders need to be forewarned that Momentum estimates are usually determined using dimensions of past rate fads. Real Momentum and rate can change anytime based on events that weren’t factored into the original computations. Because of this, it is necessary to take preventative measures, such as setting stop-losses, to safeguard versus unanticipated rate reversals in also one of the most potential Momentum circumstances.

Read Users info Top Searched Momentum Trading Formula and Financial market information, analysis, trading signals and Foreign exchange broker evaluations.

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