Resources Momentum trading One of the simplest trading strategies is momentum trading. Market watchers for ages have seen a particular stock rise and have thus speculated that it will continue to rise. Conversely, the same watchers have seen a stock fall and speculated that it will continue to fall.
Momentum trading draws on some of our most basic analytical skills.
We have all seen a rising stock chart and have, in our mind's eye, drawn a continuing rising line beyond the point where the chart currently ends. It is this imaginary line that draws us to momentum trading. The idea is simply that a rising stock will continue rising and a falling stock will continue falling. Before we explain some of the nuances of momentum trading we want to make one thing very clear. We are not saying that you can't be successful through momentum trading.