Forex Dictionary Terms

Momentum Trader

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Definition – What does Momentum Trader mean?

A momentum trader is a forex trader who trades around events or technical set ups that he or she believes will result in greater volatility. A momentum trader can operate on any time frame, but momentum trades are most common on the shorter time frames. A momentum trader can also be referred to as a momo trader.

ForexTerms explains Momentum Trader

Momentum trading can be applied on fundamentals or technicals. For example, news traders are a type of fundamental momentum trader in that they look for events that cause volatility, such as central bank announcements and economic releases. Technical traders use indicators or chart formations to identify likely points where volatility will spike. They may also use an additional indicator like the RSI to monitor the momentum and help set an exit strategy for the trade.

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