How to know when to start or stop the momentum trading strategies?
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Hello @Prashant-Shah Sir,
How do we determine when is the right time to start or stop the momentum trading strategies? In case there is no answer to this then how do we protect our momentum portfolio during market downturns like we are seeing now? -
adequate divercified portoflio with proper position sizing (minimum 2%,maximum 5% allocation),follow backtestd model,follow proper entry exits,have diverified stock universe which gives good stocks -as every market will have both kind of stcoks up-down and expect old leaders will loose their leadership and new leaders will appear
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Agree @Nishshkumar-Jaani-CFTe Sir but this question was specific to the momentum portfolio and not the overall portfolio.
Is there a way to know when to start-stop this strategy based on certain market conditions perhaps?
And can we connect separately this weekend pls? Will discuss this and more. -
you can use ratio chart and find if bond is outperforming you should stop deploying in equity
or can put fixed sl on equity tickers also backtest on the the idea -
@Nishant Paul Yes. ratio charts against other asset classes is what I have in mind going forward. I am just exploring what other options there can be.
And yes, I do keep fixed SL as well. -
I backtest without sl and it worked good for me all i neeed to do follow system blindly
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@Nishant Paul said in How to know when to start or stop the momentum trading strategies?:
I backtest without sl and it worked good for me all i neeed to do follow system blindly
How far back did you test the system? Did you test it for the period before the Covid as well?
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My 2 cents - There is a new feature to add filter in the momentum scanner. If you have a market wide condition, for e.g., I will not trade if Nifty 50 is below 200-MA, then that becomes an objective way of saying that you will stop momentum investing once Nifty goes below 200-EMA.
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Dear Sir,
My back testing results show that Index filter works wel with large cap universe. It keeps max d/d in control without much hampering CAGR. But, index filter hampers CAGR badly in so far as midcap, small cap and micro cap universes are concerned.
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@@Definedge-Experts ... Any view on this?
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Using a Market Trend Filter is an effective way to manage drawdowns in Momentum investing. However, every approach comes with its trade-offs—reducing drawdowns often means compromising on returns.
To strike the right balance, consider experimenting with different combinations. Some effective options include applying a 20-EMA or 50-EMA on the index, Renko charts with a 0.25% brick size and an 80-D Smart, use Volar for ranking.
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@Ashutosh Jain yes I did from 2017 thats how far back we can start our backtesting from
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Results of back test are phenomenal. The steep rise in gains is during the post COVID period is also fact. If one can get more than 20% XIRR returns its too good and dream return. Long term reruns normally tend to converge towards 15-17% in normal investing.
