Forex trading is not for beginners because mostly, beginners will make mistake. However, there is no professional without beginner so you can try this activity with proper rules and steps. What you need to do is identifying the movement of the price so you know whether it is strong or not using the momentum moving average crossover as the indicator line. When you want to use the formula of the indicator, you need to compare the recent closing price with the previous one.
Know The Formula of Momentum Moving Average Crossover
Mostly, the momentum indicator will be displayed on the single line between several section of the chart than the bars or price line. Perhaps, you might think that momentum moving average crossover is difficult to calculate but actually it is so easy to count. There are several different versions of momentum formula but no matter what you choose, the momentum will be the comparison between the previous closing price and current closing price. In the formula, Momentum will be represented by (M).
Meanwhile, the Current Closing Price will be represented by (CP) and the previous closing price will be represented by (CPn). You need to determine the “n” value. Here is the formula you can use such as:
M= CP – CPn or M= (CP/CPn) * 100
The first version of the formula will take the difference among 2 closing prices. Meanwhile, the second version of the formula will calculate the momentum as the change rate in price and it will be stated in the form of percentage. The indicator of momentum will identify when the price will move high or down and how strong the movement of the price is. When the momentum indicator is positive, the price will be above the “n” or previous closing price. When the momentum moving average crossover is negative, it will be below the value of “n”.
When the percentage is lower than 100, the price may be below “n”. When the amount is above or below 0 or 100, it will show you how far and how fast the price moves at that time.