Using Momentum Indicator Effectively In Binomo

Using Momentum Indicator Effectively In Binomo
Using Momentum Indicator Effectively In Binomo

In this article we will tell you about a simple indicator. This is Momentum indicator, it brings is very helpful for traders with price action styles.

The Momentum Indicator

Technical indicator that measures changes in the price of a financial instrument in a specified period of time is called the Momentum indicator. It estimates the speed of price movements by comparing current and past values. The signals that Momentum can help you understand how prices will fluctuate over time and find a solid basis for your transactions.

The Momentum Indicator in Binomo
The Momentum Indicator in Binomo

The Signals That Momentum Gives Trend Reversal Signal

When price touches the end of a trend, momentum creates a peak and then changes direction. This creates a signal that indicates that the price trend will reverse in the future.

The Signals That Momentum Gives Trend Reversal Signal on Binomo
The Signals That Momentum Gives Trend Reversal Signal on Binomo

Trend Continuation Signal

This is a signal that requires careful observation before you can recognize it.

For example,

There is phenomenon which called the divergence between price and indicator. After this period, prices will almost continue to rise in the future. It means when the price continues its uptrend when the price goes up or sideways but the Momentum shows signs of a bearish trend.

Trend Continuation Signal on Binomo
Trend Continuation Signal on Binomo

Where the price is in a downtrend (the price is falling or moving sideways) but Momentum is on a bullish trend.

Bearish Trend Continuation Signal on Binomo
Bearish Trend Continuation Signal on Binomo

How To Set Up Momentum Indicator In Binomo

Choose the Indicators menu.

Select the Momentum indicator.

How To Set Up Momentum Indicator In Binomo
How To Set Up Momentum Indicator In Binomo

Number of candles that Momentum calculated.

How to set up the Momentum indicator in Binomo - Number of candles
How to set up the Momentum indicator in Binomo – Number of candles

Then, set the color. Finally, click Apply to finish.

Trading Strategy Using The Momentum Indicator In Binomo

For effective trading strategies you can combine other indicators or signals based on the 2 signals that Momentum brings

Strategy 1: Trading Using Candlestick Colors

Entry signals will be the reversal candlestick patterns, confirming the trend reversal, which Momentum shows earlier.

Requirements: a 5-minute Japanese candlestick chart + Momentum indicator + opening deals as per the candlestick colors.

For example,

  • UP deals = Momentum forms a trough and then goes up + bullish reversal candlestick pattern (Bullish Engulfing, Bullish Harami, etc.).
Trading Strategy Using The Momentum Indicator In Binomo
Trading Strategy Using The Momentum Indicator In Binomo
  • DOWN deals = Momentum forms a peak and then goes down + bearish reversal candlestick pattern (Bearish Engulfing, Harami, etc).
Trading Strategy Using The Momentum Indicator In Binomo - down option
Trading Strategy Using The Momentum Indicator In Binomo – down deal

Strategy 2: Long-Term Deals Combined With Reversal Candlestick Patterns

Long-term deals are the deals with the expiration time of 15 minutes or more. The entry basis is the divergence of the Momentum compared to the price. The reversal signal is a special candlestick pattern (Morning Star, Tweezer, Engulfing, etc.).

  • Open UP deals = bullish Momentum divergence + bullish reversal candlestick pattern (Bullish Harami, Pin Bar, Morning Star, etc.).
Strategy 2: Long-Term Options Combined With Reversal Candlestick Patterns
Strategy 2: Long-Term Deals Combined With Reversal Candlestick Patterns
  • Open DOWN deals = bearish Momentum divergence + bearish reversal candlestick pattern (Bearish Harami, Pin Bar, Evening Star, etc.).
Strategy 2: Long-Term Deals Combined With Reversal Candlestick Patterns - open down deal
Strategy 2: Long-Term Deals Combined With Reversal Candlestick Patterns – open down deal

In this article you got acquainted with a simple indicator. Create for yourself a demo account to be able to get used to the Momentum indicator today. Good luck. Do not forget to leave any of your questions as well as comments here.

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