The Ultimate Guide To CMO Trading Strategy

Imagine that there is a magical swing, and there is Bill the first, who as know, is a beginner trader. Trust me this is a trading video. Let’s say, Bill wants to get on the magical swing facing and move towards Bill the second who is a professional trader, but he can’t stop the swing because he has no control over it, just like how most traders don’t control the market. Bill the first knows, that to get on the magical swing and move towards Bill the second, he can wait for the magical swing to move in the opposite direction, and if the swing loses its momentum, he knows that the swing is reversing. So when the swing is near the ground, he can jump on the moving swing and move towards Bill the Second.

Now imagine the swing is move revolving around the earth. It’s a magical swing, don’t question it. This time, if Bill the first gets on the magical swing, it will launch him to Mars, because it is already revolving around the Earth. If we track the path on of this moving swing, it will look something like this. To catch this forward momentum, Bill the first can get on the magical swing when the backward momentum is lost, and the forward momentum is confirmed. When Bill the first gets on the magical swing, the swing throws him in the forward direction, and Bill the first becomes the first person to reach Mars. Take that Elon Musk.

If we look at the movement of the swing for a moment, you will notice it looks very similar to an up-trending trading chart. Furthermore, the movement of the magical swing when it was on the ground, was also very similar. The first swing was similar to a range market.

In both scenarios, Bill the first was calculating the momentum to enter the right place. Well, that’s pretty much what the Chande Momentum Oscillator does.

If we replace the word swing with the price. When the price went in the opposite direction, Bill waited for the price to lose momentum, and then entered when his desired momentum was confirmed.

In the trend market, if you desire to make money by trading in the direction of the trend, you can use the Chande Momentum Oscillator. When the CMO line is above zero, it indicates a good upward momentum. And when the Chande Momentum Oscillator line is below zero, it indicates a good downward momentum.

You can also take a long position when the CMO line crosses above zero when the price is above the 200 EMA. Set the stoploss below the pullback. And when the CMO line crosses below zero when the price is below the 200 E MA, you can take a short position in the direction of the trend, and set the stoploss above the pullback.

We will test this trend trading Chande Momentum Oscillator Strategy 100 Times in the next video, just like we have tested many other strategies 100 times. Like the video to see it. Thanks.