Momentum strategy uses the trend to predict the future of a price. For instance, if the price of an asset has increased for the last 20 days, it is likely that this price will continue rising. The moving average strategy is one example of momentum strategy.
Momentum strategies assume that the future will follow the past by following an upward or a downward trend (divergence or trend trading). Momentum investment has been used for decades: buying low, selling high, buying high, and selling higher, selling the losers and letting the winners ride; all these techniques are the origin of momentum trading. Momentum investing adopts short-term positions in relation to financial products going up and sells them when they go down. When we use a momentum strategy, we try to be ahead of the market; we trade...
