Home/Guide/Beginner's Guides/Technical Indicators/Momentum Index (MTM)

Momentum Index (MTM)

2022.10.31 MEXC
Share

10.png
Definition

Momentum Index (MTM) is an indicator for short-term arbitrage. As we talked before, MTM is measuring a trend of accelerating or decelerating. In this way, technical traders utilize this index to generate entry points of uptrend or downtrend.

How to use this indicator in MEXC trading platform?

As MTM consists of two oscillators: MTM and MAMTM. The later curve is a moving average curve of the former. We will discuss it in three aspects:

  1. If we have identified an uptrend, the value of MTM on the righthand vertical axile is, in the most of time, higher than zero. Instead, if the value is less than zero, the underlying cryptocurrency’s price will deteriorate.
  2. MTM curve is positively related to the price’s movement, but it is more sensitive to the dominant party.
  3. The cross of MTM and MAMTM can be used as doublecheck for identifying trends.

Entry Point

  1. Bullish Trend

If MTM is below MAMTM and MTM begun to move back up, this would be a start of bullish trend.

  1. Bearish Trend

If MTM is above MAMTM and MTM is about to move downward, this can be regarded as bearish trend.

Advantages vs Disadvantages

  1. MTM is more efficient than trend indicators for arbitrage in short-term trading strategy.
  2. The cross of MTM and MAMTM can reveal a consolidation or reverse of one certain trend.
  3. MTM is inefficient for making profits in long-term period, since it is so sensitive to price movements that traders will be negatively affected in holding assets for long time.

Beginner Benefits

Sign up and easily get New User Rewards. There is up to 1,000 USDT Futures Bonus waiting for you.

Related articles recommendations