Momentum Trading for Newbies (and Busy Humans)

Chapter 1 — How to Use This Guide (Kid-Simple Version)

Imagine price like a ball rolling down a hill (downtrend) or up a hill (uptrend). We don’t try to stop the ball. We look for moments when the ball rolls smoothly in one direction, then carefully hop on for a short ride. That’s momentum trading.

• Read the story first, then try the simple checklists.
• Take tiny steps: practice on a demo or with very small size.
• One tool at a time: learn one concept before adding another.

Chapter 2 — Momentum: The “Surfing the Wave” Idea

Momentum means “moving things tend to keep moving.” When price moves strongly, it often attracts more buyers or sellers. That attention can help the move continue for a while. We don’t try to predict the exact top or bottom; we try to catch a chunk of a healthy move.

Kid-Friendly Picture

• Uptrend: Stairs going up—higher highs (HH) and higher lows (HL).
• Downtrend: Stairs going down—lower highs (LH) and lower lows (LL).
• Sideways: A flat hallway—nothing to surf.

What We Avoid

• Choppy sideways moves with no clear direction
• Jumping in after huge, tired moves

Chapter 3 — Candles, Timeframes, & Market Structure

Candles (OHLC)

A candle shows Open, High, Low, and Close. Green candles usually mean price went up; red means down. Wicks show how far price traveled.

Timeframes

A daily candle shows one day; a 1-hour candle shows one hour. We often zoom out to see the big trend andzoom in to time entries.

• Big map: Daily/Weekly (direction)
• Road: 4-Hour (setup forming)
• Street: 1-Hour/15-Min (entry timing)

Market Structure (HH/HL/LH/LL)

Higher Highs and Higher Lows = uptrend; Lower Highs and Lower Lows = downtrend. If structure breaks, trend may be changing.

Chapter 4 — Technical Analysis 101 (What, Why, Passive?)

Technical Analysis (TA) studies price and volume charts to understand behavior and make plans. It doesn’t “know the future,” but it helps you create a consistent, testable process.

What Tools Exist?

• Trend tools: trendlines, moving averages
• Momentum tools: RSI, MACD, Stochastic
• Volume/flow tools: Volume, OBV, VWAP
• Volatility tools: ATR, Bollinger Bands
• Levels & patterns: Support/Resistance, triangles, flags

“Passive” vs “Active” (Plain English)

• Passive indicator: a helper that describes context. You don’t act on it alone. Example: “Price is above the 50-MA, so the background trend is up.” It’s descriptive.
• Active signal: a trigger you plan to act on, because it meets your rules. Example: “Price pulls back to support, trend is up, volume returns—enter long.” It’s actionable.

Many TA tools are best used passively as filters (context), then combined into simple active rules you can follow.

Chapter 5 — Trend Tools: Lines & Moving Averages

Trendlines (Passive)

Draw a line under rising lows or over falling highs. If price breaks the line sharply, trend may be changing.

Moving Averages (MA) (Passive)

• SMA: simple average—smooths noise.
• EMA: reacts faster—weights recent price more.

Common use: if price is above a rising MA, background trend is up. We rarely trade just because of an MA; we use it as a filter.

Chapter 6 — Momentum & Oscillators (RSI, MACD, Stoch)

Oscillators measure speed/strength of moves. They can help spot pullbacks in uptrends or weaknessin downtrends. Treat them mostly as passive context unless your plan says otherwise.

• RSI: gauges momentum; high = strong up move; low = strong down move. In uptrends, pullbacks often have softer RSI—watch for momentum to return.
• MACD: compares two EMAs; the histogram shows the difference. Rising histogram = momentum building.
• Stochastic: compares close to recent range. Useful for spotting overextended short-term moves.

Chapter 7 — Volume & Volatility (OBV, VWAP, ATR, Bands)

Volume (Passive → sometimes Active when confirming)

Strong breakouts with rising volume show participation. Weak volume = be careful.

• OBV: On-Balance Volume—adds volume on up days, subtracts on down days; trends in OBV can confirm price.
• VWAP: Volume-Weighted Average Price—often used as a fair-value “magnet” intraday.

Volatility

• ATR: Average True Range—how much price typically moves; helpful for sizing stops.
• Bollinger Bands: measure volatility around a moving average—expanding bands = higher volatility.

Chapter 8 — Support/Resistance & Patterns (Flags, Triangles)

Support: area where buyers appeared before. Resistance: area where sellers appeared before. In an uptrend, old resistance can become new support after a breakout.

Common Continuation Patterns

• Flags: small, neat pullbacks after a strong move
• Pennants/Triangles: range narrows before a potential continuation
• Channels: parallel lines contain price during orderly moves

Use patterns as passive context; take action only if they align with your rules (trend + volume + level).

Chapter 9 — Entries & Exits That Make Sense

Simple Entry Styles

• Pullback Entry: Join the trend after a small rest, when buyers return (volume picks up).
• Breakout Entry: Enter as price clears a key level with strong volume.
• Retest Entry: After breakout, wait for price to “check back” to the level and hold.

Simple Exit Styles

• Structure break: trend rules stop working—exit.
• Time stop: if nothing happens within your window—exit.
• Targets: partial profits at logical levels; consider trailing stops for runners.

Chapter 10 — Risk First: Sizing, Stops, Guardrails

Think like a pilot: safety systems everywhere. Winning comes from not letting a few bad trades wreck your account.

• Risk per trade: many novices start around 0.5–1% of account (example, not advice).
• Position sizing: Risk ÷ (Entry − Stop distance) = position size.
• Stop placement: beyond the level that proves you wrong (e.g., below swing low in an uptrend).
• Daily guardrails: max daily loss and a cool-off after consecutive losses.

Chapter 11 — Playbooks: Pullback, Breakout, Trend Ride

Pullback Play

1. Big map trend up (daily/4H), price above rising MA.
2. Price pulls back on lower volume to prior support/MA.
3. Volume and momentum return; enter with predefined stop below structure.

Breakout Play

1. Identify clear resistance with multiple touches.
2. Wait for break with strong volume (no “fake” thin pop).
3. Option A: enter on break; Option B: wait for retest-and-hold.

Trend Ride

1. Stay with the move while structure holds (HH/HL or LH/LL).
2. Trail stops behind structure; scale out at key levels.

Chapter 12 — Practice Plan & Trade Journal

7-Day Starter Plan

• Day 1–2: Review this guide. Identify your one entry style.
• Day 3–4: Mark trends and levels on 10 charts (no trading).
• Day 5–6: Paper trade 3 setups with tiny risk.
• Day 7: Review screenshots and notes. What worked? What didn’t?

Journal Template

• Why this trade? (trend, level, volume, setup)
• Entry, stop, target plan
• Screenshot before/after
• Emotions (1–10): fear, greed, boredom
• Result & lesson (what to repeat/avoid)

Chapter 13 — Common Myths & Mistakes

• Myth: “One magic indicator.” Reality: process + risk control matters more.
• Mistake: Chasing moves. Fix: wait for pullbacks or real breakouts with volume.
• Mistake: Moving stops wider. Fix: accept planned losses quickly.
• Mistake: Huge size too early. Fix: earn size with consistent execution.

Chapter 14 — Where AmpFi Fits (You Stay in Control)

AmpFi is non-custodial spot-crypto automation. You connect your own exchange via trading-only API keys (no withdrawals). You define parameters, and you can enable automation or keep manual control. The goal is to help you apply a structured momentum approach—without promising results and without taking custody.