Larry Williams Best Momentum Trading Strategy

Momentum trading has the potential to generate substantial profits for traders with the appropriate personality traits, risk management skills, and commitment to following the strategy.

Executing the optimal momentum trading strategy can serve as an excellent approach to constructing and overseeing your trading account. Our team at “Trader DNA” is of the opinion that employing a momentum indicator strategy can help reduce risk and improve overall returns.

The concept of momentum is borrowed from Newton’s first law of motion. According to this law, an object in motion will remain in motion unless acted upon by an external force. This principle is known as the law of inertia.

Imagine the momentum of a train:

According to Newton’s first law of motion, when a train begins moving, it starts slowly and accelerates.

Once it reaches a certain speed, it maintains that velocity without further acceleration. This means that if a train is traveling at a certain speed, it will continue moving at that speed unless something (like brakes or obstacles) causes it to slow down or stop.

As the journey concludes, the train gradually slows down, but it requires a considerable distance to come to a complete stop. For a momentum investor, the most favorable phase of the train ride is when it is moving at its highest speed.

Similar to the principles of physics, a market that is moving tends to continue moving rather than reversing course. This is why a momentum indicator strategy can be highly effective.

• Therefore, an asset that is rising is likely to continue rising.
• And assets that are falling are likely to continue falling.

There are a variety of different momentum indicators. But the best momentum indicator is by far the “Williams %R indicator“. This indicator will help us identify profitable day trading opportunities.

The optimal configuration for the “Williams %R indicator” is 34 periods.

The Williams %R operates on a scale ranging from -100 to zero. A reading near -100 suggests that the asset is oversold, indicating a potential buying opportunity. Conversely, when it reaches zero, it indicates overbought conditions, suggesting a possible downturn.

A fundamental principle of the momentum indicator strategy is to “buy high to go higher” and “sell low to go lower.”

Essentially, this means trading in the direction of the prevailing trend while aligning with the momentum. Additionally, it’s important to consider the hidden secrets of moving averages.

• Download “TraderVersity-LarryWilliamsMomentum” (Zip/RAR File).
• Copy mq4 and ex4 files to your Metatrader Directory …/experts/indicators/
• Copy the “TraderVersity-LarryWilliamsMomentum.tpl” file (template) to your Metatrader Directory …/templates /
• Start or restart your Metatrader Client.
• Select Chart and Timeframe where you want to test your forex system.
• Right-click on your trading chart and hover on “Template”.
• Move right to select “TraderVersity-LarryWilliamsMomentum” trading  system and strategy
• You will see “TraderVersity-LarryWilliamsMomentum” is available on your Chart

• Step #1: Identify the Trend. An Uptrend is Marked by a Series of Higher Highs Followed by a Series of Higher Lows.

The most effective way, when combined with the Williams %R indicator, is to use the 200-period EMA and 50-period EMA. You can use any combination of EMA settings you prefer, but in my opinion, the combination of the 200-period EMA and 50-period EMA is the best for this strategy.

• Step #2: In an Uptrend, Look for Markets with Strong Bullish Trend Conditions.

My solution is to find markets with the strongest trend optimism levels. The way to do this is by observing the slope of the 200-period EMA and the 50-period EMA lines.

If the 50-period EMA is above the 200-period EMA and both EMA lines clearly show an upward slope, then the market is currently in a bullish condition with strong optimism.

• Step #3: Wait for the “William %R Indicator” to get oversold,or below -70. Then rallies above the -50 level before Buying.
• Step #4: Position Your Protective Stop Loss Below the Latest Higher Low.
• Step #5: Target profit at least 3 times stop loss.

• Step #1: A Downtrend is Marked by a Series of Lower Highs Followed by a Series of Lower Lows.

The most effective way, when combined with the Williams %R indicator, is to use the 200-period EMA and 50-period EMA. You can use any combination of EMA settings you prefer, but in my opinion, the combination of the 200-period EMA and 50-period EMA is the best for this strategy.

• Step #2: In a downtrend, Look for Markets with Strong Bearish Trend Conditions.

If the 50-period EMA is below the 200-period EMA and both EMA lines clearly show a downward slope, then the market is currently in a bearish condition with strong optimism.

Now, it’s time to shift our focus to the Williams %R indicator, which serves as the primary momentum indicator. This brings us to the next step in our momentum indicator strategy.

• Step #3: Wait for the Williams %R Momentum Indicator to get overbought (or above -30). Then rallies below the -50 level before Selling.
• Step #4: Position Your Protective Stop Loss Above the Most Recent Lower High.
• Step #5: Take Profit once we break above the Previous lower High

Momentum trading entails a higher level of volatility compared to many other strategies. It aims to leverage market volatility for potential gains. However, if buying and selling decisions are not timed accurately, they can lead to substantial losses.

Therefore, most momentum traders employ stop-loss orders or other risk management techniques to mitigate losses in unsuccessful trades.

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