I need help with understanding momentum

T

tony.m

I have a full time job and usually scalp ES pre-market during EU open. I'm finding it very hard to distinguish between momentum vs sideways.

During my search on ET for topics on momentum I come across a post by @QTrader20
"My only 'secret' to maintain extremely high winrate day in, day out for years (I posted many daily PnL screenshots here on ET many months ago) is by taking trades when PA shows momentum."

How does Price Action show momentum ?
 
tony.m said:
I have a full time job and usually scalp ES pre-market during EU open. I'm finding it very hard to distinguish between momentum vs sideways.

During my search on ET for topics on momentum I come across a post by @QTrader20
"My only 'secret' to maintain extremely high winrate day in, day out for years (I posted many daily PnL screenshots here on ET many months ago) is by taking trades when PA shows momentum."

How does Price Action show momentum ?
More...
I guess a T/A indicator or oscillator value or state is meant.
Maybe a "momentum oscillator" like the famous RSI oscillator? :D
"
[...]
The RSI is classified as a momentum oscillator, measuring the velocity and magnitude of price movements. Momentum is the rate of the rise or fall in price.
[...]
"
Ie. the RSI ranges above 70 and below 30 or so...
A Technical Analyst (see also here and here) surely can tell more about it.

There is also an indicator named "Momentum Indicator", here's a description and some code
https://www.tuned.com/blog/learning...omentum-indicator-and-how-to-use-it-on-tuned/
 
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tony.m said:
I have a full time job and usually scalp ES pre-market during EU open. I'm finding it very hard to distinguish between momentum vs sideways.

During my search on ET for topics on momentum I come across a post by @QTrader20
"My only 'secret' to maintain extremely high winrate day in, day out for years (I posted many daily PnL screenshots here on ET many months ago) is by taking trades when PA shows momentum."

How does Price Action show momentum ?
More...

being able to distinguish between momentum (trending market) vs
sideway / choppy / dead market will determine whether you can be a full-time day trader.
I'd say this is the most important question for day trading.


even if you have a thousand indicators, it wouldn't help you make the distinction.

I use Intermarket correlation.
This is what I do.

display ES, NQ, dax, FCE .... charts.
I wait for all (or most of them ) to move in tandem before I pull the trigger.

look at today's market.
these futures move in perfect tandem 7 minutes after the UK stock market opened.

when the market is not intercorrelated, I'd still trade but with reduced quantity.
 
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Momentum = how much the market moved over a unit of time. Strong price movements represent what? More buying than selling at a rapid rate...failure of selling to keep up with momentous buying (or vice versa of course if heading south). Aggressive movement in price.

Keltner channels and MACD are a few indicators that may help you see it a little better...but concerning indicators, Im not so sure they really tell you anything more than the price just did.
 
Another way, besides momo indicators which I do use - is to measure an appropriate range (adjusting as new ranges form) with 50% retracement applied and see whether price is trading above or below that level. Here is today's EU open 2am ET time or 8am Germany time with 50% level based on first 5 minutes of trading. As you can there was one small dip below, sideways short term consolidation above and below, then breakdown with pickup of momentum.
! eMini EU Open.png


Could you have anticipated momo pickup? Yes I believe so. Breaking away from IB of EU open and the slow but picking up more and more of the waterfall move.
 
display ES, NQ, dax, FCE .... charts.
I wait for all (or most of them ) to move in tandem before I pull the trigger.
More...

That's an effective method. I use NQ, ES and YM
Some days it's almost Holy Grailish how they follow each other.
 
tony.m said:
I have a full time job and usually scalp ES pre-market during EU open. I'm finding it very hard to distinguish between momentum vs sideways.
During my search on ET for topics on momentum I come across a post by @QTrader20
"My only 'secret' to maintain extremely high winrate day in, day out for years (I posted many daily PnL screenshots here on ET many months ago) is by taking trades when PA shows momentum."
How does Price Action show momentum ?
More...
%%
MOmo could help you like this;
say you traded SPY or inverse SH+ had a real large number of charts or price data??
AND you noticed many SEPt months slowed on upside Momo??
So good sells in SEPT can result.so if you looked @555+ momo things that could help\ more than kelp.
I seldom use it, because it tends to get out of a trend waaaaaaaaaaaaaaaaaaaaaaaay to early; but if a plan calls for out by 3;00 CST i could see why some like it.
As far as an ''only secret'' LOL; look @ 555 other things or 655 other things:caution:
 
maxinger said:
being able to distinguish between momentum (trending market) vs
sideway / choppy / dead market will determine whether you can be a full-time day trader.
I'd say this is the most important question for day trading.


even if you have a thousand indicators, it wouldn't help you make the distinction.

I use Intermarket correlation.
This is what I do.

display ES, NQ, dax, FCE .... charts.
I wait for all (or most of them ) to move in tandem before I pull the trigger.

look at today's market.
these futures move in perfect tandem 7 minutes after the UK stock market opened.

when the market is not intercorrelated, I'd still trade but with reduced quantity.
More...

You feeling ok?

The usual maxinger reply;
Markets go up
Markets go down
I make money everyday

:p
 
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