Momentum Trading: Ride the Market Wave
Momentum trading can be exciting and profitable, but it involves high risk if done incorrectly. The goal is to catch a stock or crypto that is “trending” and ride the trend. Success depends on timing, discipline and risk management.
- A Simple Momentum Trading Strategy
- Identify high-momentum stocks that break key resistance levels.
- Wait for a pullback to the breakout level (support).
- Enter the trade when price shows renewed strength (green candle or higher low).
- Use 5-minute or 15-minute charts for intraday movements. Always place a strict stop-loss just below the retracement zone.
Check Relative Volume (RVOL) – Stocks with RVOL > 2 indicate unusual activity, which is ideal for momentum trading.
Done right, momentum trading can be very profitable. The most important thing is to plan your entries and exits before trading and never blindly chase green candles.