1. What is Stock Momentum?

Stock momentum measures the rate of acceleration of a stock's price movement. It indicates the strength and direction of price trends, helping investors identify stocks that are gaining or losing momentum in the market.

2. How Does the Calculator Work?

The calculator uses the momentum formula:

Where:

• \( Current\ Price \) — The most recent price of the stock
• \( Past\ Price \) — The previous price of the stock at a specific point in time

Explanation: The formula calculates the percentage change in price between two time periods, providing a measure of the stock's momentum.

3. Importance of Momentum Calculation

Details: Momentum calculation is crucial for technical analysis, helping traders identify trends, make buy/sell decisions, and develop momentum-based trading strategies.

4. Using the Calculator

Tips: Enter current price and past price in currency units. Both values must be positive numbers greater than zero for accurate calculation.

5. Frequently Asked Questions (FAQ)

Q1: What does a positive momentum value indicate?
A: A positive momentum value indicates that the stock price has increased from the past price to the current price.

Q2: What does a negative momentum value indicate?
A: A negative momentum value indicates that the stock price has decreased from the past price to the current price.

Q3: What time periods should I use for momentum calculation?
A: Common periods include daily, weekly, or monthly momentum, depending on your trading strategy and time horizon.

Q4: How is momentum different from simple price change?
A: Momentum specifically measures the rate of acceleration, not just the direction of price movement, making it more sensitive to recent price changes.

Q5: Can momentum be used for all types of stocks?
A: While momentum can be calculated for any stock, it's most effective for liquid stocks with sufficient trading volume and price history.