A Momentum Trade is a trading strategy where a trader buys currencies with high past excess returns ("winners") and sells in currencies with low past excess returns ("losers"). The theory behind this strategy is that recent winners are more likely to continue winning, while recent losers are more likely to continue losing.There are two main problems with this strategy. First, it assumes that past performance is indicative of future performance, which is not always the case. Second, it relies heavily on timing; if you buy the "winner" too late or sell the "loser" too early, you can miss out on profits (or end up making losses).Overall, momentum trading can be a risky strategy but if done correctly, it can also lead to some big profits. If you're thinking about trying it out, make sure you do your research and understand the risks involved before putting any real money at stake.
