Momentum Indicator IQ Option – How to Trade?

Written by IQ Option

The Momentum is a technical analysis tool, designed with the sole purpose of identifying the trend strength, which is the velocity of price changes. The Momentum is displayed as a single off-chart line and is easy to follow. The indicator can be used on any asset and any time frame — both novice traders and hardened veterans will find it useful. Read the full article on the Momentum Indicator to learn more about how it can be used on the IQ Option platform.

How does it work?

This indicator will compare the current price of the asset to its price from several periods ago. The bigger the difference between the two, the higher the indicator readings will be. Should there be no difference at all, the indicator will remain at 0, pointing to a sideways market.

Momentum trend

Four different quotes can be used: the indicator can compare the maximum, minimum, opening, and closing prices of the underlying asset. Closing prices are the most commonly used. However, the other three can be applied, as well, for different types of signals.

Read about other IQ Option indicators in our selection:

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How to set up the IQ Option terminal?

Here is what you want to do in order to set up the Momentum indicator on the platform IQ Option:

To get started, log in or register on the platform. This guide also applies to IQ Option applications.

trade with indicator

Click on the ‘Indicators’ in the bottom left corner of the trade room and go to the ‘Popular’ tab.

setup the IQ Option

Select “Momentum” from the list of available options in the IQ Option trading terminal.

set up the Momentum indicator

Click ‘Apply’ in the new window that will then appear.

The indicator is ready to use. Note that the period and the quoted value can be adjusted in order to make the indicator either more sensitive or decrease the number of false signals.

How to use it in trading?

The Momentum can be used for the purpose of receiving timely and accurate trading signals that will help you open a trade on the IQ Option platform. It can also be utilized as an additional tool that can help you confirm signals received from other indicators.

The higher the indicator, the faster the upward price movement. The lower the indicator, the faster the downward price movement. When the indicator reading is equal to zero, there is no prevailing trend on the market (the market is flat).

Types of signals when trading with the Momentum on IQ Option

1. It can be used as MACD.

In this case, the trader will open a corresponding position (either buy or sell) when the indicator is at its maximum or minimum. When using this strategy, it is important to confirm the signal with another indicator of a different type.

signals when trading with the Momentum

2. It can also be used as an anticipatory indicator.

This strategy is based on the premise of accelerating growth/decline at the end of the trend cycle. When the trend, either positive or negative, suddenly accelerates, it can be expected to run out of power soon enough. Although useful, this method is not 100% accurate and should be used with care.

3. Used as a supplementary tool to confirm or disprove signals

Thirdly, the Momentum can be used as a supplementary tool to confirm or disprove signals, provided by other indicators. Be it Fractals, the Alligator, or Bollinger Bands, the Momentum can help you make the right decision when the need arises.

Let’s summarize

The Momentum is a simple technical analysis indicator that can become a valuable addition to the collection of your trading tools available for trading on IQ Option. It will suit both novice and experienced traders, as it can be tuned up and adjusted to your trading strategy and style.

trade with Momentum indicator IQ Option

However, it should be noted that no technical analysis indicator is capable of providing accurate signals 100% of the time.

 CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. 

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