Momentum
What does it mean when a market's weekly returns keep coming in with the same sign?
In plain words
Momentum is the tendency of returns to keep the same sign over consecutive periods: a stretch of positive weeks that stay positive, or a stretch of negative weeks that stay negative. It describes persistence of direction, not its cause.
Why it matters
Traders and sizing rules often assume the recent direction carries forward. Runs in one direction can attract leverage faster than fundamentals change, so exposure accumulates along the trend, and a reversal meets a crowded side. Momentum describes what has persisted; it does not say how long persistence lasts.
In a real week: ETH, week of 3 February 2020
For the week starting 2020-02-03, ETH returned 21.23%, following prior weekly returns of 8.25%, 13.8%, 0.64% and 12.23%. That is five consecutive weeks with the same positive sign. The weekly return ranked in the 96th percentile of the 103 weeks of history recorded, and funding averaged 0.0454% per eight hours, indicating longs were paying to hold through the run.
A common mistake
Reading momentum as a forecast. A run of same-sign returns describes persistence already observed; it gives no information about the length or size of the next move.