Momentum Day Trading

What Is Momentum in day trading?

Momentum is when a stock has been traveling up or down for a period of time measured by a day trader. In day trading the direction must be present for longer than 1 minute and shorter than a day. Day Traders recognize when a stock has been traveling in a direction and enter to ride the trend of the momentum.

Momentum has many elements. Rate Of Exchange (ROC), Relative Strength Indicator (RSI) Moving Average Convergence Divergence (MACD) and Stochastics. All of these help the day trader verify the momentum before entering a position. All of these indicators are your friends and will help you but occasionally your friends turn against you. Always be prepared!

"A trader must recognize momentum, the same way a hang glider must recognize where the thermals are located in the atmosphere."

When beginner day traders learn to trade the are
taught to only buy on the "offer" not the "bid".

As momentum begins you will see:

The spread become tight, the inside Bid will become thick, the offer is
thin.

As the buy pressure increases:

High bids come in as the offer begins to lift, stock will print on the offer. (Sometimes stock might even print through the inside offer.)  

The strength of the momentum is directly related to the speed at which stock goes through (rips) price levels.

As momentum ends:
You will recognize the End of Momentum when the High Bids are no longer coming in, sell pressure is building up, offer becomes thick (sign of weakness), bid is thin and the stock now trades on the Bid.