To install click the Add extension button. That's it.

The source code for the WIKI 2 extension is being checked by specialists of the Mozilla Foundation, Google, and Apple. You could also do it yourself at any point in time.

4,5
Kelly Slayton
Congratulations on this excellent venture… what a great idea!
Alexander Grigorievskiy
I use WIKI 2 every day and almost forgot how the original Wikipedia looks like.
Live Statistics
English Articles
Improved in 24 Hours
Added in 24 Hours
Languages
Recent
Show all languages
What we do. Every page goes through several hundred of perfecting techniques; in live mode. Quite the same Wikipedia. Just better.
.
Leo
Newton
Brights
Milds

Momentum (finance)

From Wikipedia, the free encyclopedia

In finance, momentum is the empirically observed tendency for rising asset prices to rise further, and falling prices to keep falling. For instance, it was shown that stocks with strong past performance continue to outperform stocks with poor past performance in the next period with an average excess return of about 1% per month.[1][2] Momentum signals (e.g., 52-week high) have been shown to be used by financial analysts in their buy and sell recommendations.[3]

The existence of momentum is a market anomaly, which finance theory struggles to explain. The difficulty is that an increase in asset prices, in and of itself, should not warrant further increase. Such increase, according to the efficient-market hypothesis, is warranted only by changes in demand and supply or new information (cf. fundamental analysis). Students of financial economics have largely attributed the appearance of momentum to cognitive biases, which belong in the realm of behavioral economics. The explanation is that investors are irrational,[4][5] in that they underreact to new information by failing to incorporate news in their transaction prices. However, much as in the case of price bubbles, recent research has argued that momentum can be observed even with perfectly rational traders.[6]

YouTube Encyclopedic

  • 1/3
    Views:
    497
    2 011
    905
  • ✪ What is Momentum?
  • ✪ The Momentum Effect in the Stock Markets
  • ✪ Financial Momentum

Transcription

Welcome to the Investors Trading Academy talking glossary of financial terms and events. Our word of the day is “Momentum” Momentum trading is much less concerned with ‘precise’ entries and more with the force and continuation of the move. Traders are not looking for the price to pull back or break out from any specific price, but merely to start moving more or less in the direction of the prevailing trend. This type of trading is fundamentally based but also relies heavily on indicators such as moving averages and oscillators to give trading signals. Traders will use momentum based strategies when they perceive a long term move to be taking place on the asset that they are trading. For example, if there is a significant change in the fundamentals of a nation that will result in an interest rate change, this will cause investors to act and begin buying or selling the currency of that nation in line with those changes. Other examples include geo political events that remain in place for many months and sometimes even years. During these significant shifts, professional traders will be looking to trade these currencies over the long term, often holding their positions over a period of weeks and months. Because of the longer term nature of this strategy traders are not as concerned about entry points and simply wait until minor technical analysis gives them an opportunity to profit from the move. A popular indicator for this type of trading includes the 200 period moving average, and very often traders will look for price to break above or below this moving average in line with the anticipated move, at which point they will enter the market and hold their positions. Exits are generally governed by fundamentals in a similar way to entries, with traders watching the economic and geo political events very closely before deciding which trading approach they will take and how they will manage those ongoing positions.

See also

External links

References

  1. ^ Jegadeesh, N; Titman S (1999). "Profitability of Momentum Strategies: An Evaluation of Alternative Explanations". NBER Working Paper (7159).
  2. ^ Jegadeesh, N; Titman S (1993). "Returns to Buying Winners and Selling Losers: Implications for Stock Market Efficiency". Journal of Finance. 48 (48): 65–91. doi:10.1111/j.1540-6261.1993.tb04702.x.
  3. ^ Low, R.K.Y.; Tan, E. (2016). "The Role of Analysts' Forecasts in the Momentum Effect". International Review of Financial Analysis. 48: 67–84. doi:10.1016/j.irfa.2016.09.007.
  4. ^ Daniel, K; Hirschleifer D; Subrahmanyam A (1998). "A Theory of Overconfidence, Self-Attribution, and Security Market Under and Over-reactions". Journal of Finance (53). doi:10.2139/ssrn.2017.
  5. ^ Barberis, N; Shleifer A; Vishny R (1998). "A Model of Investor Sentiment". Journal of Financial Economics. 49 (49): 307–343. doi:10.1016/S0304-405X(98)00027-0.
  6. ^ Crombez, J (2001). "Momentum, Rational Agents and Efficient Markets". The Journal of Psychology and Financial Markets. 2 (2): 190–200. doi:10.1207/S15327760JPFM0204_3.


This page was last edited on 19 February 2019, at 15:26
Basis of this page is in Wikipedia. Text is available under the CC BY-SA 3.0 Unported License. Non-text media are available under their specified licenses. Wikipedia® is a registered trademark of the Wikimedia Foundation, Inc. WIKI 2 is an independent company and has no affiliation with Wikimedia Foundation.