A narrowing upward pattern where price forms higher highs and higher lows, but the range…
Momentum vs. Volatility
Factor | Momentum (Trend Strength & Speed) |
Volatility (Price Fluctuations & Uncertainty) |
Definition | Measures how fast and strong a price moves in one direction. | Measures how much and how quickly price fluctuates up and down. |
Direction | Moves steadily in one direction (up or down). | Moves both up and down unpredictably. |
Market Type | Best in trending markets. | Common in choppy or uncertain markets. |
Risk Level | Lower risk if trend is strong and stable. | Higher risk due to sharp price swings. |
Effect on Trading | Used for trend-following strategies (buy in uptrend, sell in downtrend). | Helps in risk management, stop-loss setting, and options pricing. |
Indicators Used | RSI, MACD, Moving Averages. | Bollinger Bands, ATR, VIX. |
Best for | Swing traders, trend traders, breakout traders. | Day traders, scalpers, options traders. |
Stock Example | A stock rising from ₹500 to ₹600 in 2 days with strong trend. | A stock jumping from ₹1000 to ₹1200, then falling to ₹900 in a day. |