What it is
Momentum is one of the oldest and simplest indicators. It measures how far price has travelled over a fixed number of candles. If gold closed 12 points higher than it did 10 candles ago, momentum reads plus 12.
Because it is in price units, the line shows both direction and speed. A steepening line means the move is speeding up; a line that flattens while price keeps climbing means each new candle is adding less. It is the same idea as Rate of Change, which shows the move as a percentage instead of points.
How it is calculated
1. Take the latest close. 2. Subtract the close from 10 candles earlier (the length setting). 3. Plot the result around a zero line. Positive means higher than 10 candles ago, negative means lower.
Settings
| Setting | Default | Range | What it changes |
|---|---|---|---|
| Length | 10 | 1 to 300 | How many candles back the comparison is made. Short lengths react to every swing; longer lengths show the bigger trend's pace. |
How to read it
How to trade it
- 1
On a 1 hour US30 chart in an uptrend, wait for a pull-back that takes momentum(10) below zero.
- 2
Buy when momentum crosses back above zero on a closed candle and price is still above its 50 period average.
- 3
Place the stop under the pull-back low, typically 60 to 100 points on 1 hour US30.
- 4
Target 2 times the stop, or exit early if momentum makes a lower high while price makes a higher high.
- 5
On gold, use the same rules on 15 minute charts with a stop of 6 to 10 points.
A buy on a zero cross is proved wrong when momentum closes back below zero and price breaks the pull-back low.
WickSpeak runs in your browser with nothing to install. When you add Momentum, it writes a plain-English reading on the live candle: what the indicator is, what it is doing right now, how to trade it and what would prove that reading wrong. It says how many points price has moved over the window, whether that pace is building or fading, and whether a divergence is forming.
In Playbook, our no-code strategy builder, Momentum can be a condition in a play. It can test whether Momentum: crosses above zero; crosses below zero; is above zero; is below zero; is rising; is falling. Each condition can run on any of 12 timeframes from 1 minute to weekly, combined with up to 11 others, and the play can be backtested on past candles with your own costs and turned into alerts on screen, by email or by phone push.
There is also a WickSpeak Momentum. Its line is coloured by strength: faint when the push is weak, glowing when it is strong, mint above zero and pink below it. Crosses of zero are marked only once the candle has closed, so a marker never appears and then vanishes mid-candle. A gold marker shows a stretched reading, meaning the strongest few percent of its own range or a reading past a fixed extreme level. Divergences between price and the oscillator are drawn on both the chart and the indicator, and a chip shows the same reading on a higher timeframe.
Best markets and timeframes
Works on any market and timeframe. Because it reads in points, values on gold and US30 differ a lot, so judge the shape and zero line rather than the raw number.
Common mistakes
- Comparing the raw number across markets; 50 points on US30 is a small move, 50 points on gold is a large one.
- Selling because momentum fell while it is still above zero, which only means the rise is slowing.
- Using a length of 1 or 2, which just copies each candle's change and is mostly noise.
Works well with
Questions traders ask
What is the difference between Momentum and Rate of Change?
Momentum shows the change in price units, such as points. Rate of Change shows the same change as a percentage of the old price. Their shapes are almost identical, but Rate of Change can be compared across markets.
What is the best momentum indicator setting?
10 and 14 are the most common. Swing traders sometimes use 20 or more to follow the larger trend's pace.
Is momentum a leading indicator?
It often turns before price does at the end of a move, because the pace slows first. That makes it an early warning, but it is still calculated from past closes and can turn without price following.
What does momentum crossing zero mean?
It means the latest close has moved above or below the close from the chosen number of candles ago. Above zero, price is higher than it was; below zero, lower.