Momentum Trading: Catching Trends with AI

Momentum trading is simple physics: An object in motion stays in motion. When a crypto asset breaks out with high Volume, it tends to keep going.

How Momentum Bots Work

They are inactive during choppy/boring markets. They wait like a sniper for a Breakout.

1. Trigger: Price breaks a key Resistance level + Volume spike + Sentiment Surge.
2. Entry: The bot market buys instantly.
3. Management: It uses a "Trailing Stop-Loss" (e.g., 5%). As price goes up, the stop-loss follows it up.
4. Exit: As soon as the trend reverses by 5%, the bot sells.

The Trailing Stop

This is the secret sauce. You don't set a fixed target (like "Sell at $100"). You let the market decide.

• If price goes to $100, $200, $1000... you ride it all the way.
• You only exit when the momentum finally breaks.

Risk vs. Reward

• Win Rate: Often lower (40-50%). Many breakouts are "fakeouts."
• Risk/Reward: Massive (1:5 or 1:10). One big trend pays for 10 small losses.

This strategy requires patience and discipline—perfect for Psychology management by AI.