What Is Momo Trading?

What is MOMO Trading

What is momo trading and what does momo stand for? These are common questions we see all the time.

Although there are many different types of trading strategies available, ‘momo’ trading strategies have become more and more popular in current markets.

In this post, we’ll discuss what momo trading strategies are, how you can use them to trade stocks, and how they differ from other styles of trading.

What does Momo stand for?

Momo simply stands for momentum.

The term momentum is borrowed from Newton’s first law of motion, also known as the Law of Inertia. The law states that an object will remain at rest or move at a constant speed in a straight line unless an external force is applied to it.

According to the law, an external force is needed to change the direction or speed of a spacecraft. This force could be supplied by the engine of the spacecraft. An external force is needed to move the pen on your table. You could supply the force by pushing the pen.

In the day trading world, momentum basically refers to the level of aggressiveness in the market.

When shares of a given company are showing strong positive momentum, traders are jumping over each other to buy.

Momo Trading

Like in Newton’s law, a stock in motion tends to remain in motion rather than the reverse. Momo trading is based purely on the volume and trend in a certain direction.

Simply put, momentum in the market has less to do with the fundamentals of economics and balance sheets, and more to do with the faddishness of human behavior.

In essence, traders often jump to the stocks that have been rising, which tends to push them further.

Momo, or momentum, traders don’t determine whether the stocks are cheap or expensive in theory or analyze why technology stocks, for example, are on a winning streak recently.

Momo traders hop on the bandwagon, aiming to close their positions before the inevitable train wreck that brings the journey to an end.

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Disclosure: Nothing written in this article is intended to be a buy or sell ...

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