The price momentum replaces all major oscillators such as RSI, MACD, Stochastic, and visualizes not only the direction of price movement much more accurately, but also **quality** of this wave**.**
Smoothed waves show each wave taking into account its strength and speed:
* **Wave color** shows the mood of the current wave (**green** - bullish, **red** - bearish)
* **Wave size** shows the strength of the current wave (how strong the bulls or bears are)
* **Dots** show the exact moment of wave reversals (🟢**green** - up, 🔴**red** - down, the brighter the dot, the stronger the reversal signal)
* **Purple lines** show divergences (discrepancy between price and momentum strength)
## Applying price momentum in trading
Waves help understand the strength of bulls or bears and avoid weak and unreliable moves — for example, when a green wave is large and prolonged, it indicates bull strength and entering a short while the wave hasn't diminished is dangerous - the stronger the momentum, the higher the probability the movement will continue.
Dots help determine ideal moments to enter, take profit and add to positions — look for moments when momentum begins to change, confirming the start of a short-term trend.
**Opening a position:**
* In **a bullish trend** the optimal entry points will be 🟢**green dots** on the **green wave**, or the moment the green wave begins when the color changes
* In **In a bearish trend** the optimal entry points will be 🔴**red dots** on the **on the red wave**, or the moment the red wave begins when the color changes
**Adding to positions:**
When momentum is actively increasing you can add to positions on pullbacks to maximize profit from the movement — add to your position when dots of the desired color appear in continuation of the trend (during a pullback the price remains within the current momentum zone).
**Taking profit:**
If momentum begins to slow against the background of reaching a key price level, the appearance of a reversal dot is a signal to take profit.
{% hint style="success" %}
First of all, try the simplest [trading strategy based on price momentum](/faq-en/simple-strategies.md#strategiya-impuls-ceny) from the indicator developer
{% endhint %}
{% tabs %}
{% tab title="Long trades" %}
In the example we see how a red momentum turned into **green**...
Next all 🟢**green dots** - are potential long trades in continuation of the trend, or zones to add positions.
{% endtab %}
{% tab title="Short trades" %}
In the example we see how a green momentum turned into **red**...
Next all 🔴**red dots** - are potential short trades in continuation of the trend, or zones to add positions.
{% endtab %}
{% tab title="Taking profit" %}
In the example of a long trade after strong upward impulses, 🔴**red dots** - are profit-taking zones, as well as the moment when the wave colors change to **red.**
{% endtab %}
{% endtabs %}
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