Momentum indicator training
Momentum MetaTrader 4 Forex Automated Trading and Strategy Robot
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Momentum indicator
The momentum indicator is designed to detect the speed of price movement. This indicator is one of the leading indicators. The momentum is calculated by comparing the current closing price of the stock with the closing price of the previous period of the stock. N is the period of time chosen by the analyst.
The formulas calculated in this indicator are in two ways:
M: Momentum
CP: Final price
CPn: Final price over n time period
This formula shows the difference between the current final share price and the share price in n time periods as a percentage .
The momentum indicator fluctuates upwards and downwards, when the indicator is above the 100 line, it means that the closing price is higher than the closing period of the n period, and when it is below the 100 line, it means that the price The final share price is less than the closing price of the n period. The distance between the indicator at the top and bottom of the 100 line indicates how fast the price is moving.
Momentum MetaTrader 4 Forex Automated Trading and Strategy Robot
The figure above is the symbol of WebMelt (Bank Mellat), the momentum indicator is shown in the 100 line range. When the momentum indicator is above the 100 line, we see an upward trend in the share, and when the momentum indicator is below the 100 line, the share trend is down.
The advantage of using a momentum indicator
Using this indicator, we can receive signals based on buying and selling, but the most help that this indicator gives to the trader in identifying the trading trend is that he trades based on any kind of share price change (eg failure). And money backs made in the share process and …… ..).
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Momentum indicator signals
Breaking the trend line
Momentum MetaTrader 4 Forex Automated Trading and Strategy Robot
The figure above is the share chart of Midco (Middle East Mining Industries Holding) and as indicated, the indicator has broken its downtrend and the share trend has been uptrend after the trend line is broken.
Position of the indicator relative to the 100 line
To make better use of this signal, we add the moving average to the indicator. When the momentum indicator cuts the moving average from the bottom up, it is a good trading opportunity to buy the stock, and when the momentum indicator cuts the moving average from the top to the bottom, we take the trading position, because the trend share It will start its decline.
Momentum MetaTrader 4 Forex Automated Trading and Strategy Robot
The image above is a web-based chart (Bank Saderat) that well illustrates the relationship between the trend and the momentum indicator and the moving average and the buy and sell signal.
Momentum MetaTrader 4 Forex Automated Trading and Strategy Robot
As shown in the figure above, you must select the Navigator option and the Navigator will open at the bottom of the page.
Momentum MetaTrader 4 Forex Automated Trading and Strategy Robot
After the Navigator opens, select the Moving Average and drag it to the momentum indicator. After adding the moving average, the momentum indicator looks like this.
Momentum MetaTrader 4 Forex Automated Trading and Strategy Robot
Divergence in the indicator
Positive divergence in the indicator occurs when the price is falling, but in the indicator there is an upward trend. Consider the following example regarding the share of Khodro (Iran Khodro).
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Momentum MetaTrader 4 Forex Automated Trading and Strategy Robot
Negative divergence occurs when the price has an upward trend, but in the indicator the trend is down, and then we see a decline in the share trend. The following example of Topico (oil and gas and petrochemical supply) shares shows a decline in the share trend after the negative divergence .
Momentum MetaTrader 4 Forex Automated Trading and Strategy Robot
Trading volume and momentum indicator
Momentum examines changes in market share prices over time, taking into account trading volume . For example, when the volume of transactions increases, the speed of momentum changes increases and vice versa.
Momentum MetaTrader 4 Forex Automated Trading and Strategy Robot
The figure above shows the share of Iran Telecommunication (Akhabar) which shows that with the increase in trading volume, the momentum indicator has found an upward trend.
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