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The difference between Momentum and Volatility, and how to use it in your trading


This is the opinion of Optimus Futures.

The misunderstandings and misconceptions between volatility and momentum can lead to expensive trading mistakes and result in a flawed chart, market analysis, and trading decisions.

Volatility and momentum are two fundamentally different things. We will explore the differences between the concepts, how to measure volatility and momentum, and how to use them for effective trading decisions.


What is volatility?

Volatility describes how much price fluctuates around a mean. If you would use a moving average and see prices going back and forth around the moving average, markets are in a high volatility environment. Furthermore, if candlesticks have relatively long candle shadows compared to the candle body, it also signals a volatile market.

Thus, volatility is also often referred to as a risk indicator because high price fluctuations can signal indecision in the markets, and the powers between buyers and sellers are constantly shifting.


What is momentum?

To a certain degree,

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Trend Exhaustion in Futures Trading – Why The Last Part Of A Trend Is The Most Dangerous


This article on futures trading trend exhaustion is the opinion of Optimus Futures.

Everyone knows that financial markets move in waves. But how can you, as a trader, profit from such well-known price behavior? The Dow theory and the Elliot Wave theory are very well respected because they describe the fundamental nature of how people interact in the financial markets and how they drive prices.

However, when it comes to making actual trading decisions, you have to be able to translate theoretical concepts into actionable ideas. That’s where this article comes in. We will now show you how to identify trend exhaustion by combining commonly used trading knowledge.

Market phases and trend waves

Before we get started, let us come back to the core basics of financial market theory. The Dow theory and the Elliot wave theory are ideal when it comes to identifying trend exhaustion.

Dow Theory

The Dow theory is based upon the

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What does volatility really mean for you as a trader?


Volatility and Trading

Everyone is always talking about volatility. But how does it really affect your trading and how can you use it to your advantage? If you are stuck and not seeing the results you desire, becoming a volatility expert can potentially help you take the next step. Increasing the size of your profitable trades, avoiding stop runs during high volatility times and maximizing the win to loss potential of trades are just three examples of how volatility can benefit your trading.

The screenshot below shows why it is necessary to trade with a volatility-adjusted trading strategy. The ATR – average true range indicator – (more on that later) is plotted at the bottom and the indicator shows that price constantly shifts from low to high volatility periods. If your trading shows inconsistent results, volatility could be at the core of your problem.

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Why You Shouldn’t Drop Technical Analysis Even if You are a Day-Trader


The combination of volatile markets in 2008 and the rapid advancement of trading technology opened up new possibilities and an emphasis on the ‘day trader.’ Many amateur traders were drawn in to day trading after hearing unrealistic, although popular, promotional phrases such as ‘daily income’ and ‘don’t wake to disasters.’ However, day trading is not less challenging than the traditional long term strategies, and in fact requires deep analytical skills along with a deep mental focus to translate and filter market noise. Market noise can be thought of as institutional interest that is not related to speculation.

Interestingly enough, the most disturbing trend has been the neglect for traditional technical analysis that has been exercised for over 100 years, and also the general acceptance that traditional technical analysis does not work.

When many make the shift from long term trading to day-trading they often neglect technical analysis. “Isn’t technical analysis for long

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