📚 Stock Market Glossary
Clear, beginner-friendly explanations, real-world analogies, and visual formulas for key stock market terminology.
Market Momentum
Trading & Market💡 Key Takeaway: The rate of acceleration of a security's price or volume, representing the driving force behind market trends.
Rolling Snowball Analogy: Pushing a snowball down a steep snowy hill builds unstoppable momentum as it grows larger and rolls faster automatically!
😎 10-Second Show-off Pro Tip for Friends!
😎 Show-off Tip: Say, 'Even cheap stocks need a strong fundamental or macro catalyst—a momentum driver—to unlock hidden value and trigger a breakout.'
📖 Beginner-Friendly Explanation
STEP 1
Core Concept & Meaning
Momentum refers to the velocity of price changes in a stock.
STEP 2
Why It Matters & Mechanism
In stock trading, momentum represents either strong trend continuation (upward or downward inertia) or a catalyst event (e.g. FDA drug approval, AI partnership) that propels the stock price in a specific direction.
STEP 3
Practical Investment Tips & Pitfalls
When applying this concept in real markets, always verify the overall trend and implement disciplined risk management.
📊 Momentum Indicator RSI (Relative Strength Index)
RSI > 70 ➔ Buying trend is overheated (upward momentum is at its peak) / RSI < 30 ➔ Oversold state
▶ Use momentum indicators to diagnose whether stock prices will continue to trend or break.
⚖️ Key Comparison at a Glance
| Category | Value Investing | Momentum Trading |
|---|---|---|
| Key buying criteria | Is the stock price cheaper than the company's true value? (underrated) | Is the stock price currently experiencing a strong upward trend? (Trend) |
| Main Interest | PER, PBR, ROE, financial statements, asset value | Chart trend line, new product news, supply and demand volume |
| Investment period | Months to years (long-term holding) | Hours to weeks (short-term/mid-term trading) |
📌 Practical Market & Real-World Example
Driven by policy stimulus and Nvidia supply contract momentum, the semiconductor stock surged for three consecutive weeks.