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Momentum |
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The
rate of acceleration in the price movement of a security. |
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Momentum
is often accompanied by an increase in volume.
A momentum trader aims to identify accelerating price movements
and enter the market with the objective of following this move.
As momentum moves tend to be fairly short lived a momentum trader
is typically classified as a day trader. Exit strategies for momentum
trading include: predefined targets, tight stop losses and the
evaporation of momentum. This type of trading is an advanced technique
and generally requires a good deal of experience.
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