LIVESometimes we get to learn things the wrong way.
A lot of traders don't even understand what 𝐌𝐨𝐦𝐞𝐧𝐭𝐮𝐦 and 𝐕𝐨𝐥𝐚𝐭𝐢𝐥𝐢𝐭𝐲 are.
Let's quickly brush that 👇
⤵️ 𝗠𝗼𝗺𝗲𝗻𝘁𝘂𝗺
This simply refers to the speed at which the price of an asset changes with respect to time.
We have POSITIVE & NEGATIVE Momentum
Positive momentum simply means the price of an asset is generally rising showing buy pressure.
Negative momentum simply means the price of an asset is generally falling showing sell pressure
Momentum is used by traders to know the strength or weakness of a trend.
Some indicators used include RSI, MACD etc
⤵️ 𝐕𝐨𝐥𝐚𝐭𝐢𝐥𝐢𝐭𝐲
This refers to the degree of variation of a trading price.
High volatility entails that the price of an asset changes rapidly by significant amounts and in a short period.
E.g Coin A is $8 now, moves to $30 5minutes later and after 1hr drops to $7
Low volatility
This simply means price changes or fluctuates gradually and by small amounts
Volatility is used by traders to know how quickly/sudden a price changes
E.g of Volatility Indicator is BollingerBand
Can you now differentiate between momentum & volatility?
If yes I'm glad you did.
Stay tuned for more insightful contents