Momentum
Momentum is a financial term used to describe the rate of increase or decrease in the price of a security over a period of time. It is a measure of the strength of a security’s price movement and is often used to identify trends in the market. Momentum is calculated by taking the difference between the current price and the price of the security at a previous point in time. Momentum can be used to identify potential buying and selling opportunities in the market.
History of Momentum
The concept of momentum has been around since the early days of stock market trading. In the late 19th century, the Dow Jones Industrial Average was developed to measure the performance of the stock market. This index was based on the idea of momentum, as it tracked the performance of the stocks in the index over time. Since then, momentum has been used by investors and traders to identify trends in the market and to make decisions about when to buy and sell.
Comparison Table
| Time Period | Price Increase | Momentum |
|---|---|---|
| 1 Day | 5% | 5% |
| 1 Week | 10% | 10% |
| 1 Month | 15% | 15% |
| 1 Year | 20% | 20% |
Summary
Momentum is a financial term used to measure the rate of increase or decrease in the price of a security over a period of time. It is a useful tool for investors and traders to identify trends in the market and to make decisions about when to buy and sell. More information about momentum can be found on financial websites such as Investopedia and The Motley Fool.
See Also
- Price Momentum
- Relative Strength Index (RSI)
- Moving Average Convergence Divergence (MACD)
- Bollinger Bands
- On-Balance Volume (OBV)
- Price Volume Trend (PVT)
- Average Directional Index (ADX)
- Commodity Channel Index (CCI)
- Stochastic Oscillator
- Parabolic SAR
