Momentum Investing: Backtesting

[Rajendra Manke-1755576305833]

I have watched recently published podcast of Mr Prashant Shah with Mr Vijay Thakkar on Momentum Investing.

I was aware of the concept and I had already tried to carry out backtesting of the Momentum investing concept in GoogleSheet on Nifty 200 shares. I had pulled daily data of Nifty 200 shares for 8.5+ years with the help of GoogleFinance functions. Although it was done with very limited resources but I could get clear idea of its benefits. But deployment of this concept in live scenario was impossible for obvious reasons.

Mr Shah has thoroughly explained how it can be backtested and implemented in the virtual and thereafter in the real environment. Immediately, I opened account with Definedge.
After doing multiple rounds of backtesting on different Nifty group shares I got some very good results. One of the results is attached. CAGR of 60+ is unbelievable. Max DD is 10.86%. I tested the strategy for various periods and got good results.

As I am new to this platform and still exploring the features, I want to know that which built-in functions can be used in reducing the drawdowns in real life scenario.

[prashant.shah26@gmail.com]

Good work in a short time. The drawdown in your strategy is already under control. You may also explore using a Market Trend Filter to further manage drawdowns.

Please test the strategy results across multiple periods and on different groups. It is acceptable if the CAGR reduces slightly, but ensure you check it during bearish market phases as well as on a broader universe like the Nifty 500 index.

For deeper understanding, you can refer to my book on Momentum Investing or watch the videos available in the Learn section of Momentify.

Regards,
Prashant