The Momentum (or Rate of Change) indicator as the name suggests is the velocity with which the price is rising or falling, and hence will reflect how aggressively the asset is being purchased or sold.
Calculation: Momentum = ( (Today's close - Close n periods ago) / (Close n periods ago) ) * 100
Signals: Some traders buy when the signal crosses above zero, or sell when prices move below zero.
Best Use: Divergence between price and the Momentum indicator
The strongest use of the momentum indicator is divergence between price and the indicator. The S&P 500 chart below shows that when prices reach a lower low, but the indicator reaches a higher low (or trending up) the down trend in price is about to change. The same can be seen when prices reach a higher high but the momentum indicator started to trend lower the up trend was about to change.
How To Plot: Select the Momentum indicator from the drop down box as shown below. Enter the number of days in the parameter box to the right of the indicator. 
How to Use: It is best to combine this indicator with other indicators such as Z-Score and Volume. These indicators will help to indicate if the trend has moved too far too fast and if the volume is supporting the current trend.