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5.7 Momentum Indicator trading instructions

Momentum indicator is a ‘must’ for any trend dealer. The the reason for this is that is as a result of it measures potential and weak point of a trend. therefore, it provides us with just right signals for entering and exiting a change. The momentum indicator is a ‘leading’ indicator which means that that it works moderately beforehand of costs. which means it can be used to acknowledge trends earlier than they in truth form. [1. When the momentum indicator is above the centre line traders should look to get into a up-trend. When it is below the centre line, we should be getting into a down-trend. The only factors you must remember is not to trade in the opposite direction i.e. trading downwards when the momentum indicator is above the center line and vice versa. 2. We can also use this indicator to trade divergence between itself and prices. So, when prices are making lower lows and the momentum indicator is making higher lows, we have divergence. It is here that we look to trade in the upward direction because the indicator has shown us signs of a weakening down-trend in the price chart. 3. The last way to use the momentum indicator is to wait for a breakout. After drawing a trend line in our price chart we would draw the same line in the indicator window. Once we have a breakout in both prices and the indicator, we can take a trade. Watch the full Forex training video to see how this powerful indicator can be used.]


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