Trading What is momentum in the Crypto market is a question many investors wonder about. Momentum trading is a profitable but also controversial trading strategy. So, how to use this strategy most optimally and effectively when trading? Let’s join Learn Crypto Trading to learn the details of the Momentum trading strategy right now!

What is Momentum in the Crypto market?

Basic concepts of trading: What is Momentum? Momentum is an indicator that measures momentum in the cryptocurrency market. Using this indicator will help investors make profits in short-term trading sessions.

In the cryptocurrency market, the concept of What is Momentum?

Trading Momentum in the Crypto market focuses on detecting the upward or downward trend of an asset. Then, it will rely on that trend to trade short-term and make profits. When applying this indicator to Crypto trading, investors will detect the upward or downward momentum of a fluctuation. Based on that, investors can place a position order for themselves. Most of the time, when trading according to this indicator, investors will buy high and sell higher or vice versa.

It can be said that using this indicator when trading Crypto is quite ideal, but also brings many risks. The fluctuations in the Crypto market in a session are quite large. Especially for low-cap altcoins, along with new Altcoins that cause large fluctuations. These fluctuations can last for a whole week, so using the indicator will apply to that whole week.

How is Momentum different from Fomo?

So, what is the difference between Fomo and the Momentum strategy? Investors need to understand that Fomo is not a trading strategy. Fomo represents the investor’s fear of missing out on opportunities in the financial market. This leads to hasty trading situations and causes losses. When falling into a state of FOMO, investors are very susceptible to high expectations. Sometimes they will not plan to cut losses because they are too hasty in being influenced by emotions.

Compared to Fomo psychology, Momentum’s strategy helps investors grasp trading opportunities thanks to the market’s ups and downs. These ups and downs are detected through indicators, volume, or candlestick patterns. When applying the Momentum strategy to trading, investors will have a trading strategy with a clear stop-loss position.

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Applying What are Momentum trading strategies?

Momentum is an indicator that includes a blue oscillating line. The reference line of Momentum has a value of 0. Based on the value of the indicator and the distance of the reference line. Investors can evaluate the strength of trends in the market.

Support resistance breakout signal with Altcoins

Before learning about this signal, let’s learn about the concept of What are altcoins? Altcoins in the cryptocurrency market are understood as alternative coins. Except for Bitcoin, all other coins are alternative coins. The signal of breaking resistance after the market goes sideways will be a sign that buying power has returned.

Investors need to identify the sideways phase for many consecutive days. If the volume is large, the market needs to be monitored more closely. There are times when the selling volume increases but does not break the support level, so wait. 

An investor can place a stop-buy order if both conditions are met. The first condition is that the trading volume increases. The second condition is that the resistance level must be successfully broken. This will help the investor earn profits with a margin of double the margin of the edge. And of course, the investor also needs to have the discipline to quickly cut losses when the price reverses. The remaining profit targets should not be too hopeful, but should be set as limits.

Breakout signal in What is Momentum?

When trading Crypto, investors will often encounter breakout signals. However, investors should not confuse breakout signals with pump conditions. So, Crypto, what is a pump? Pump is a phenomenon of pumping prices in the Crypto market. This condition will appear when one party pumps the price of an asset with low liquidity and then sells it at a high price. When this condition appears, many investors will think that this is a breakout signal for a price range.

A breakout signal in the Crypto market refers to a coin whose indicators surpass the old price level. The old peak will be considered a resistance level. When the breakout signal appears, that resistance level will become a support level. Investors need to observe the bottom of the pattern. With the breakout signal, investors can place a stop-sell order.

Confirmation of trading volume for Altcoins

In some cases, investors can detect an uptrend or downtrend sooner than expected. Using the Momentum strategy in combination with indicators such as RSI or MACD will help investors do this.

However, when applying any indicator together, investors also need to clearly understand the indicator they are using. Please wait for the indicator’s technical signal if it begins to appear. When starting an order, investors can enter the order inside the candle that has been confirmed by the signal.

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In the Crypto market, what factors affect the Momentum strategy?

Some of the factors that can affect the Momentum strategy include trading volume, tools, psychology, etc. With the Momentum strategy, most transactions are made in small time frames. If there is a sudden spike in trading volume, this is a technical signal.

If the investor trades long-term or trades according to the trend. Using historical price data will be prioritized. However, for the Momentum trading strategy, the investor can use indicators that prioritize action. Some indicators, such as Price Action or EMA, MA to find new trends.

When participating in trading, investors should also prepare themselves mentally. Trading Momentum helps investors detect the increase and decrease when the market starts. Therefore, it often requires investors to buy high and sell higher. This can easily cause a chasing mentality in the market.

Conclude

When investors can grasp the nature of what momentum is. Investors will be able to fully apply themselves to the Crypto market in the most flexible way. The essence of trading is to make profits for yourself. Investors, no matter what trading method they use, need to ensure the safety of their capital. Follow Learn Crypto Trading every day to get more information about the Crypto market!

FAQs

Is Momentum suitable for Scalping trading?

The essence of Momentum trading is to take advantage of the momentum of increases and decreases for short-term trading. Investors can completely use Momentum for scalping trading.

Is Momentum Trading Suitable for New Investors?

Whether you are a long-time investor or an inexperienced one. The condition to use Momentum trading is to know.

Does Momentum Trading Work with Altcoins?

Investors can apply Momentum to Altcoins