Queries on Momentum Investing
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Hi @Prashant-Shah
Like a lot of your followers, I am super impressed by your vidoes on Momentum Investing. Thanks for all your efforts!
Few queries
1 - your strategy seems to be tied up with ATH/52 week high. Have you considered there might be stocks in momentum but far away from ATH/52week high? E.g. strong quarterly results. If so , please provide more options in the scanners you think can work.
2 - Do you think we should pryamid our winners? Can I add more funds to the winners? Or while rebalancing, instead of adding new securities, just distribute the balance amount to the winners
3 - I am wondering how I can add a fixed amount every month to my portfolio , similar to a SIP. Basically I want to start small ( say with 1L, test the waters, get comfortable with a process & then add more money) . Look at 2 scenarios:
a) Lump-sum top up to a running portfolio
b) SIP like behaviour , say adding 1L every month4 - Can we consider changes to number of stocks held depending upon market conditions. Adding more stocks (20--> 30) in bull markets
5 - I am awaiting backtesting feature for such strategy changes, I am not sure whether the current Rzone backtesting module will be helpful in testing. Please advise
Thanks
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This post is deleted!
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Hi @Prashant-Shah Sir,
When we use a look-back period and conditions like being above the 200 EMA or above D-Smart, are these conditions applied to the present day or the specified look-back period?
I today ran the scanner today with parameters as shown in the screenshot. The list is sorted on Volar score. You may see that this list doesn't contain Neuland Lab is missing in top 5.
However, when I ran the same scanner on Saturday last week Neuland Lab featured at 5th place as you can see in the screenshot below. In the last week it has gone below D-smart hence now not showing in the scanner. Or am I missing something?
Thanks!
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Hi @Prashant-Shah , could you please respond to my queries, Thanks.
@@Definedge-Experts - FYI -
@BK Thanks.
1 - You can create a group of stocks based on quarterly results in the Radar platform and use the same group for momentum investing. Increase the retracement percent from 52-week high. If you select the retracement percent as 50% or 60%, stocks far away from the 52-week high will also appear on the list.
2 - You can do that. It is also a form of rebalancing. Added to winners instead of buying new stocks.
3 - You can always increase investment amount in the running portfolio. SIP is tricky. Many people have asked me about SIP in momentum stocks. I will explain it in my next momentum investing video.
4 - I don't think it will benefit. Let's keep it simple.
5 - We will add a backtesting option to the same scanner. The model you create can be backtested from the same tab. We'll update you soon about this feature.
I recommend separate books for front line stocks and midcaps or small caps.
Hope I could answer your questions.
Regards,
Prashant
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@Ashutosh Jain It will be applied on look-back period. For example, if you have selected the look-back period as 5, the scanner will calculate 200-EMA on the 5th candle from the present day.
If the look-back period is 0 (default), the conditions will be applied on the present day.
Yes, that scrip was missing because it was not above D smart.
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@Prashant-Shah Can you please clarify if the backtesting feature for momentum investing scanners lets the winners run in weightage or it rebalances the entire portfolio to equal weights after each period?
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Momentum investing is a strategy where investors buy stocks or assets that have shown an upward price trend and sell those with declining prices. The idea is that assets which perform well will continue to do so in the near future. This approach relies on the belief that trends, whether positive or negative, persist for a certain period. It's popular among traders looking for short-term gains, though it carries risks, as market trends can reverse unexpectedly.
