Understanding Momentum in Investing

What is the primary concept of momentum in investing?

• A stock's price will always decrease.

• A stock's price will always increase.

• A stock's current price trend is likely to continue.

• A stock's price is unpredictable.

How does the momentum indicator measure a stock's price change?

• By measuring the rate of change in a stock's price over time.

• By comparing the stock's price to the market average.

• By calculating the average price over a year.

• By predicting future stock prices.

What does it mean when the momentum indicator crosses the zero line?

• The stock's price is stable.

• It may indicate a potential entry or exit signal.

• The stock is guaranteed to fall.

• The stock is guaranteed to rise.

Why might investors use additional filters with the momentum indicator?

• To reduce transaction costs and noise from too many signals.

• To increase the number of signals.

• To ensure every signal is acted upon.

• To eliminate the need for other indicators.

Which of the following is a suggested filter to use with the momentum indicator?

• Relying solely on the momentum indicator.

• Using high volume or price patterns.

• Avoiding any additional analysis.

• Ignoring market trends.