Momentum indicators forex

The creator of the Momentum indicator is unknown, but Martin Pring has written much about the indicator. It attempts to measure the momentum behind price indicators for the underlying currency pair over a period of time. Traders use the index to determine overbought and oversold conditions and the strength of prevailing trends. Overbought and oversold conditions are imminent when momentum curve reaches maximum or minimum values.

The addition of a Smoothed Moving Average with the indicator improves indicators of imminent trend changes. The Momentum indicator is regarded as an excellent gauge of market momentum. A shorter period setting will create a more sensitive indicator, but will also increase choppiness and the potential for increased forex signals. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your forex objectives, level of experience, momentum risk appetite.

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