What is Momentum?
Momentum subtracts the price from a fixed number of bars ago from the current price. When price is higher than it was 10 bars ago the line is above zero, and when it is lower the line is below zero. The further from zero, the larger the change over that span. It is drawn in its own pane with a dashed zero line.
Momentum shows how much price has changed over a fixed look-back, in the market's own price units. It is not a percentage, so readings cannot be compared across markets, and it does not predict future prices.
How to use Momentum
- Above or below zero. Above zero, price is higher than it was the set number of bars ago. Below zero, it is lower.
- Crossing zero. A cross of the zero line marks a change in direction over that look-back.
- A flattening line. If price keeps rising but Momentum stops rising, the move is continuing at a slower pace.
- Divergence from price. A new price high with a lower Momentum high suggests the move is gaining less ground each time.
These are ways to read the line, not entry signals on their own.
Settings
| Setting | Default | What it changes |
|---|---|---|
| Length | 10 | How many bars back the comparison reaches. Shorter is more responsive and noisier; longer is steadier and slower to cross zero. Minimum 1. |
| Source | Close | Which price is compared. Open, high, low and the averaged sources such as hl2 and hlc3 are also available. |
Adjust the look-back and the price source in the indicator settings.
Calculation
Momentum is a single subtraction:
Momentum = price - price 10 bars agoThere is no smoothing. The line moves bar by bar with price, and it also moves when the price 10 bars back drops out of the comparison, so a large bar affects the line twice: once when it arrives and again when it is the bar being compared against.
The first value appears on bar 10 counting from 0, the first bar with a price 10 bars before it.
Limitations
- It is in price units. The same reading means very different things on a high-priced coin and a low-priced one, and on the same coin after a large price change. Rate of Change expresses the change as a percentage.
- It is noisy. With no smoothing, the line follows every bar, including the bar dropping out of the comparison.
- Zero crosses whipsaw in ranges. In a sideways market the line crosses zero repeatedly without a trend following.
- The live candle moves. The current bar's value changes until that bar closes.
- It is not a strategy. On its own it carries no risk management, sizing or exit.
Frequently asked questions
Momentum is the current price minus the price a fixed number of bars ago, 10 by default. It is drawn in a separate pane with a zero line, above zero when price has risen over that span and below zero when it has fallen.
Both compare the current price with the price a set number of bars ago. Momentum reports the difference in price units, while Rate of Change reports it as a percentage of the older price. The percentage version can be compared across markets; the price version cannot.
There is no single best length. A shorter look-back reacts sooner and crosses zero more often, including on noise. A longer one is steadier but later. The built-in default is 10. Choose a length for the timeframe you trade and test it.
Yes. The indicator declares two inputs: Length, default 10 with a minimum of 1, and Source, default close. Open the indicator's settings on the chart to change them.
No. Each value is the difference between two fixed prices, and closed bars do not change. The current candle's value moves while that candle is live and settles when it closes.
Use the Add to chart button at the top of this page. It opens BTC/USDT on Binance in the Altrady Charts terminal with the built-in Momentum already applied. On any other market, open the indicator picker on the chart and choose Momentum from the Momentum group.