Momentum

The Momentum indicator measures the amount that a security's price has changed over a given time span. The Momentum indicator displays the rate of change as a ratio.

The Momentum indicator can be used as a trend-following oscillator or as a leading indicator.

Used as a trend-following oscillator, technical analysts typically buy when the indicator bottoms and turns up and sell when the indicator peaks and turns down. If the Momentum indicator reaches extremely high values and then turns down, you should assume prices will probably go still higher.

The method of using the Momentum indicator as a leading indicator assumes that market tops are typically identified by a rapid price increase and market bottoms end with price declines. As the market peaks, the Momentum indicator will climb sharply and then fall off, diverging from the continued upward or sideways movement of the price. Similarly, at a market bottom, the Momentum indicator will drop sharply and then begin to climb well ahead of prices.

The Momentum indicator in BigCharts references the following default parameters: