Characterized by patience, Momentum traders wait for the perfect opportunity to invest. They remain on the lookout for assets whose value is taking a huge swing in order to make a profit on them. This type of trading is recommended for beginners.

Momentum trading is an investment strategy that involves buying securities that are rising in price and selling those that are falling. This approach is based on the idea that securities with strong recent performance will continue to perform well in the near term. Traders use technical analysis to identify trends and signals that indicate momentum, such as moving averages, relative strength index (RSI), and volume indicators. The goal is to capitalize on market volatility and ride the wave of price momentum. Momentum traders often employ short-term trading tactics and may hold positions for a few days to a few months. While potentially profitable, momentum trading carries risks, including sudden price reversals and increased transaction costs due to frequent trading.