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Jordan Spizikes Momentum Trading - What Makes Mome 
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Dołączył: 18 Maj 2011
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PostWysłany: Czw 7:15, 26 Maj 2011  

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Momentum trading is a style of trading that is also known by another name, swing trading. Traders who use the momentum present in markets to place trades do so by riding price as it swings up and down with the trend over time. This form of trading is frequently used by professional bankers with deadly accuracy, but you will rarely find any private traders using this style. While other more inexperienced traders try to trade lower time frame charts,[link widoczny dla zalogowanych],[link widoczny dla zalogowanych], bankers are swing trading on the hourly, four hourly and daily charts with much better results. They are able to trade with much better accuracy because of the low level of risk offered by momentum trading and because of the unique trade entry criteria that is commonly used in momentum trading.
It is safe to say that most traders who trade anything less than an hourly chart will not last long in any financial market. This isn't to say that there are so successful scalpers out there, but the majority of people looking to get involved in trading will quickly become frustrated and give up. Even if they do manage to make a profit, it will not be long lived. Scalping or any other similar low time frame kind of trading is equivalent to throwing your money down the drain. Momentum traders avoid this risk by trading the higher time frames. These time frames filter out much of the market noise and give traders a much clearer and more precise picture of what the market is really doing. When trading the higher time frames trend identification is much easier, price action is more reliable and even indicators become more precise in what they plot about price. How can anyone stand to make a profit trading five minute charts where there are trends that last mere minutes and sometimes just seconds? It is easy to see why momentum traders avoid the risk associated with these low level time frames and only trade the hourly and daily charts.
The other advantage momentum trading offers is that of the trade entry criteria. Most private traders usually get in just at the top of a run before price crashes and goes against them. This rarely happens to bank traders and that raises the question of what is different about their trade setups that makes them so profitable? One key and crucial thing momentum traders are looking for is market value. Value here meaning that the instrument being traded needs to be at a price that is below what everyone else paid. Put another way, bank traders wait for price to retrace against the trend and then enter just before it resumes movement in the direction of the trend. By doing this they are paying a price that is lower than what the majority of other traders paid. They are avoiding getting in just at the top before price crashes, if it does turn against them. The benefits of waiting for value to be present are twofold. The first is that since you get in at a better price you stand to make more money,[link widoczny dla zalogowanych],[link widoczny dla zalogowanych], even if price moves only a little. The other advantage is that because you got in at a lower price you stand to lose less money if price goes against you. Waiting for value to be present can turn a losing trade into a winning one and a winning trade into an enormously profitable one.

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