Trading strategies based on trend and momentum are pretty similar. If we can use a metaphor to illustrate the difference, the trend strategy uses speed, whereas the momentum strategy uses acceleration. With the trend strategy, we will study the price historical data. If this price keeps increasing for the last fixed amount of days, we will open a long position by assuming that the price will keep raising.Â
The trading strategy based on momentum is a technique where we send orders based on the strength of past behavior. The price momentum is the quantity of motion that a price has. The underlying rule is to bet that an asset price with a strong movement in a given direction will keep going in the same direction in the future. We will review a number of technical indicators expressing momentum...
