What is Momentum?
Momentum is the tendency for assets that have been moving strongly in one direction to keep moving that way for a while. Momentum approaches try to buy strength or sell weakness, riding an existing move rather than fading it. The risk is that momentum reverses sharply, so the move that looked strong can turn against the position quickly.
Why Momentum matters
Momentum is the opposite assumption to mean reversion, so it clarifies whether a strategy follows moves or fights them.
Related terms
Lessons that use this term
Continue