Excessive Momentum in Momentum Trading

In this article, we will provide you the trading strategy that works beyond the momentum trading strategy, that is also known as the Excessive Momentum trading. Firstly, momentum trading is a strategy where traders take positions based on the strength of a market trend. Momentum Trading is popular in volatile markets, aiming to capitalize on short-term trends. The fundamental idea behind the momentum trading is to identify trends with sufficient force behind them. However, just understanding momentum trading won’t let you become rich as everyone or everytrader understand that. To go beyond other traders, you also need to understand the concept of Excessive Momentum in the momentum trading strategy.

Excessive momentum referes to the too much momentum in Forex and Stock market. When unusually high momentum is observed in Forex and Stock chart, this often lead to two secnarios in financial market. Firstly, the momentum can be slow down and the market can change the direction. Secondly, the momentum can be slow down and the market can continue to its direction. First scenario is often used to trade the reversal pattern or reversal chart pattern. Second scenario is often used to trade the continuation pattern or continuation chart pattern. Regardless of which scenario we are dealing with, excessive momentum detection can help us to place accurate entry for our trading and investment. In fact, this idea is very similar to the Accumulation or Distribution area in the Volume Spread Analysis or Wyckoff Method. Hence, the disclipline of Volume Spread Analysis or Wyckoff Method can be used when you trade with Excessive momentum.

Excessive momentum is an important clue in our trading as well as the sideways market.  You can consider Excessive momentum as the opposite concept to sideways market. So why Excessive momentum is important signal in our trading? Imagine that you are pouring some milk in your cup. It is fine until it is overflow. When milk is starting to get split from our cup, we realized that we need to take some correction.

This analogical concept can be applied to our trading too. Simply speaking, Excessive momentum can signal us that market can go through some brand new action from the existing trend. It might be turning point opportunity or reversal opportunity. Around this Excessive momentum area, market is more predictable. In addition, you have an opportunity to become early enterer with good profitable range.

Before, trader did not have a good tool to catch an excessive momentum but now we have the Excessive Momentum Indicator designed to catch Excessive momentum automatically in your chart. Good news is that this entry is more accurate with Excessive momentum than without Excessive momentum presents. Hence, Excessive momentum is ideal location to place your trading. Excessive momentum area is marked up as triangle in Excessive Momentum indicator.

At the same time, this Excessive Momentum Zone can be considered as either Accumulation or Distribution area in the Volume Spread Analysis. You can further find the symptoms of accumulation and distribution area using our Volume Spread Pattern Indicator (Paid and Advanced version) or Volume Spread Pattern Detector (Free and Light version). You can also watch the YouTube video to find out more about Excessive Momentum Indicator.

YouTube Video “Momentum Indicator”: https://www.youtube.com/watch?v=oztARcXsAVA


Here is the landing page for Excessive Momentum Indicator available in MetaTrader 4 and MetaTrader 5.




Firstly, Volume Spread Pattern Indicator is the powerful volume spread analysis indicator that operated across multiple timeframe. Here is the link to Volume Spread Pattern Indicator.




Secondly, Volume Spread Pattern Detector is the light version of Volume Spread Pattern Indicator above. This is free tool with some limited features.




Excessive Momentum

Excessive Momentum

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