A momentum strategy involves buying assets that are trending upward and selling or avoiding those trending downward, based on the assumption that strong performance tends to continue. Traders use indicators like moving averages, rate of change, and volume spikes to identify assets with strong upward momentum. This approach thrives in trending markets and is often combined with technical analysis to confirm entry and exit points. Momentum trading capitalizes on investor psychology and market sentiment, making it effective during periods of economic optimism or sector-specific rallies. While powerful, it requires strict risk management to avoid losses during sudden reversals. Momentum strategies are popular among both retail and institutional traders seeking to ride market trends for sustained gains.