In finance, momentum is the empirically observed tendency for rising asset prices to rise further, and falling prices to keep falling. For instance, it was shown that stocks with strong past performance continue to outperform stocks with poor past performance in the next period with an average excess return of about 1% per month (Jegadeesh and Titman, 1993, 1999).

The existence of momentum is a market anomaly, which finance theory struggles to explain. The difficulty is that an increase in asset prices, in and of itself, should not warrant further increase. Such increase, according to the efficient-market hypothesis, is warranted only by changes in demand and supply or new information (cf. fundamental analysis). Students of financial economics have largely attributed the appearance of momentum to cognitive biases, which belong in the realm of behavioral economics. The explanation is that investors are irrational (Daniel, Hirschleifer, and Subrahmanyam, 1998 and Barberis, Shleifer, and Vishny, 1998), in that they underreact to new information by failing to incorporate news in their transaction prices. However, much as in the case of price bubbles, recent research has argued that momentum can be observed even with perfectly rational traders (Crombez, 2001).

In classical mechanics, linear momentum or translational momentum (pl. momenta; SI unit kg•m/s, or, equivalently, N•s) is the product of the mass and velocity of an object:

Like velocity, linear momentum is a vector quantity, possessing a direction as well as a magnitude. Linear momentum is also a conserved quantity, meaning that if a closed system is not affected by external forces, its total linear momentum cannot change. Although originally expressed in Newton's second law, the conservation of linear momentum also holds in special relativity and, with appropriate definitions, a (generalized) linear momentum conservation law holds in electrodynamics, quantum mechanics, quantum field theory, and general relativity. In relativistic mechanics, non-relativistic linear momentum is further multiplied by the Lorentz factor.