BITFINEX:BCHUSD   Bitcoin Cash / U.S. Dollar
My 15m scalping technique - 14 length
Our team at Trading Strategy Guides believes that a momentum indicator strategy can reduce risk and enhance your overall returns.
One of the core market principles is that momentum precedes price so in this sense a momentum indicator strategy is more like a trend following strategy.
Essentially trends tend to continue and we can use momentum to determine when to buy and when to sell.
There are various explanations for why momentum occurs. The simplest explanation would be that rising prices attract buyers and falling prices attracts sellers.
Using a momentum indicator strategy, it means we’re only going to hold the trade for a very short period of time, anywhere between a few minutes and up to a few days. Basically, the best momentum trading strategy runs until the momentum drys out. So, we only want to concentrate on the relative strength of any instrument.
The best momentum indicator is by far the Williams %R indicator.
This momentum indicator will help us identify profitable trading opportunities. Works with all market and time frames.
The preferred settings for the best forex momentum indicator is 40 periods
The Williams %R runs on a scale from -100 to zero. A reading in the vicinity
of -100 is an indication that the instrument is oversold and it’s a potential buying opportunity and once it reaches zero, that’s an indication of overbought and maybe the time to sell.
Step #1: Define the Trend. An Uptrend is defined by a Series of HH Followed by a Series of HL.
The definition of an uptrend is pretty much standard. In an uptrend, we look for a series of higher highs followed by a series of higher lows. Two HH followed by at least another two HL is enough to define an uptrend.
A higher high is simply a swing high point that is higher than the previous swing high. While a higher low is simply a swing low that is higher than the previous swing low.
In order to gauge momentum besides reading the best momentum indicator we also look at the actual price action.
Step #2: In an Uptrend Look for Bold Candlesticks that Close Near the Higher End of the Candlestick .
A common concept in technical analysis is that you want to use multiple confirmation signs when buying and selling. This will increase the likelihood that’s a high probability trading setup.
In this regard, the momentum trading strategy besides using the best momentum indicator also incorporates the price action.
A practical way to read momentum from a price chart is to simply look at the candlestick length. What we want to see in an uptrend is big, bold bullish candlesticks that close near the higher end of the candlestick .
Step #3: Wait for the best Forex Momentum Indicator to get oversold (below -80) and then rallies above the -50 level before Buying
In an uptrend, we buy after the best momentum indicator has reached oversold conditions (below -80) and then rallied back above the -50 level.
Now, we have confirmation from both the price and the best momentum indicator that real momentum is behind this trend and the probabilities are in favor of more upside prices from here on.
Note* If the best momentum indicator continually stays in overbought territory (above -20 level) it signals a strong momentum and conversely a strong trend. Inversely the same is true in a downtrend.
Step #4: Place Your Protective Stop Loss below the Recent Higher Low
We want to hide our protective stop loss below the most recent higher low level that formed right before the best momentum trading strategy issue the buy signal.
Alternatively, you can also trail your stop loss below each most recent higher low. This strategy will allow you to lock-in the potential profits in case of a sudden market reversal.
Step #5: Take Profit once we break below the Previous Higher Low
Alternatively, you can take profit once the best momentum indicator breaks below the -50 level.
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