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7 The Momentum

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7 The Momentum

Uploaded by

eric5woon5kim5thak
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The Momentum-Shift Signal

The momentum-shift signal is a universal principles that is required in all our trades. Most
reversal traders make the mistake of entering way too early, always trying to call a top and
bottom. As the famous market wizard Jesse Livermore said:

One of the most helpful things that anybody can learn is to give up trying to catch the last
eighth – or the first. These two are the most expensive eighths in the world. They have cost
stock traders, in the aggregate, enough millions of dollars to build a concrete highway
across the continent.
The momentum-shift signal, as you will see, helps us get into trades at a later stage but with a lot
more context and confidence.

Let’s recap:
▪ We use the 20 period SMA as an entry filter. It keeps us from picking tops and bottoms
▪ We require a strong, high momentum break of the 20 SMA
▪ Sometimes, the moving average won’t help (we will explore that later), but when we trade with
trendlines and other local structures, we also always require a high momentum break
▪ Trading with the momentum is key

www.Bestblackhatforum.com Thanks to mr.Sir for share and skillerm for uploading.

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