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Definition: Momentum

Momentum is a measure of largely market sentiment. It is a good pointer of total market changes which are more likely to continue in the near future.

Momentum reflects changes not only in the price level, but also in volume. Momentum is generally measured by the change in volume.

For example:

If a price for a security begins to increase then going by the momentum it is more likely to continue to increase. Similarly, if price starts decreasing, then momentum is that prices will continue to decrease for some time.


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