Momentum is an oscillator used for picking price directions and for determining trend reversal points in Olymp Trade.
It thrives on the idea that an asset on the move will keep moving towards the same direction; pull-backs and price corrections notwithstanding.
In a layman’s language, momentum can be translated to mean trend.
If say you are trading the EUR/USD in Olymp Trade and there is a foreseeable up trend then you can also call that a bullish momentum.
On the flip side, if it is moving lower in price then that’s a bearish momentum.
In essence, the momentum indicator takes the form of a line that moves and periodically crosses the 100 level as you will later see in this post.
How to Use the Momentum Indicator to Trade on Trend Reversal.
Before trading with this or any other indicator, try to have an open mind and remember that there is no such indicator or strategy that guarantees a 100% success.
Using the momentum indicator in Olymp Trade is also not a guarantee of winning but at least better for trading than the naked eye.
For efficiency, ensure that you only trade after seeing these two signals. Otherwise, keep waiting until they appear either together or in succession.
Trading the upward reversal with the momentum oscillator
1. The momentum oscillator has to reach the bottom values.
2. Then it turns upwards and starts to move toward 100 levels.
Also consider this third signal. The shorter average on the oscillator crosses from below the longer average momentum, creating a new bullish trend.
Trading the down reversal with the momentum oscillator
The same concept above applies on trading down with this oscillator. Except, when trading up: –
1. The oscillator reaches the top values.
2. Then it turns downward and starts to move toward 100.
Also consider this third signal. The shorter average on the oscillator crosses from above the longer average momentum, creating a new bearish trend.
How to Pick Downtrend Signals with the Momentum Oscillator.
Aside trading on trend reversals with the momentum oscillator, traders in Olymp Trade can also open fixed time trades on visible trends.
For that, follow these two signals indicating that the price will likely continue to fall.
1. Ensure that a downtrend has formed on the chart.
2. Also, ensure the Momentum line has intersected the 100 level top down and continues to fall, which confirms a bearish trend.
How to Pick Uptrend Signals with the Momentum Oscillator.
To use this oscillator to pick upward trends look for the following signals.
They indicate an impending trend continuation.
- First you have to ensure that there is an uptrend forming on your chart.
- Secondly, check to confirm that the momentum line has intersected to 100 level bottom up and that it continues to rise to reflect an upward trend on the charts.
How to Best Use The Momentum Oscillator to Ensure Maximum Results.
As I had mentioned earlier, no strategy in trading is 100% but at least you can ensure you achieve maximum results intended by using these tips.
- Make sure the momentum oscillator period remains 14. Do not change it if you want optimum results.
- Try to combine this oscillator with other indicators in Olymp Trade to form a bullet proof trading strategy. If a combination works, stick to it.
- It is preferable if you use this oscillator to trade on trend reversals. If you want to trade on price direction, add an indicator or two to confirm the signals.
Activating the oscillator in olymp Trade.
Login to your Olymp Trade account if you are already registered.
Or register here if you don’t have an account.
- Locate and click on the indicator button in Olymp Trade.
- Scroll to find the momentum oscillator in the list of oscillators.
- Now click on it to activate.
Do not change anything on the indicator. Leave it as it is with the standard periods for both the slow and the fast-moving averages.