Find Users Videos Top Searched Momentum Quant Trading, #172: The magic of momentum trading – Alan Clement.
Quant Trader Alan Clement from Helix Trader discusses momentum trading & strategies, including:
• Why momentum trading is so popular and how it works,
• What makes a good trend indicator and the 4 best indicators to identify trends,
• Why the moving average is not a good trend indicator,
• How to rank stocks by momentum and how many momentum stocks to hold in a portfolio,
• The danger of stops and using momentum for exits instead,
• How dual momentum protects during Bear markets and market crashes,
• Filtering out false signals in indicators,
• Plus, market regimes, shorting weak stocks, position-sizing, and much more!
► You can discover more from Alan at: https://www.HelixTrader.com and https://www.SmartSystematicTrading.com
*** Timestamps ***
00:00 Getting started!
02:46 What is momentum trading?
04:28 Why momentum trading is so popular
06:05 Disadvantages and challenges of trend following
07:37 How and why momentum works
09:34 What makes a good trend indicator
12:03 The 4 best indicators to identify trends
14:02 Balancing smooth vs lag in indicators
15:05 How to measure strength and direction using ADX
16:08 Why moving average is not a good trend indicator
17:18 The best lookback period for measuring momentum
18:53 Why weekly charts is the sweet spot for momentum
20:38 Combining indicators for Dual Momentum
21:58 Absolute vs Relative momentum
23:16 Benefits of Dual Momentum
24:17 Using Dual Momentum to manage risk and as an exit
27:53 How to rank stocks by momentum
28:53 How many momentum stocks to hold in a portfolio
30:45 The danger of stops and using momentum for exits
33:40 How dual momentum protects during market crashes
35:38 Why Market Breadth is not a good timing tool
36:36 Position sizing based on momentum scores
38:52 Chart example of Relative momentum
39:58 Using momentum on the Short side
42:36 Shorting the weakest momentum stocks
44:04 Should you punish volatile momentum stocks?
45:33 How to implement a market regime filter
47:38 The “magic” of dual momentum
49:48 Using Linear Momentum to measure momentum
50:53 Dual momentum in Futures strategies
52:10 Filtering out false signals in indicators
53:22 Momentum in long-term bear markets
54:56 Signals a bear market is starting
57:38 How to learn more from Alan
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Momentum Quant Trading, #172: The magic of momentum trading – Alan Clement.
Just how do we measure the Momentum?
Scientists determine the Momentum by increasing the mass of the item by the rate of the item. It is a sign of how hard it would certainly be to stop the item. If you were running, you may have a mass of 50 kgs as well as a velocity of 10 meters per second west (actually fast).
Nonetheless, the idea was obscured as well as left inactive following the advancement as well as popularisation of value investing theory from the 1930s onward. Capitalists would certainly focus much more on the inherent, or “basic,” value of a property, as well as much less on the trajectory of the activity of its rate.
Complying with a renaissance of technical evaluation later on in the century, the idea of Momentum investing appreciated a resurgence with the publication of a research by Jegadeesh as well as Titman in 1993. It revealed that investors as well as markets often tended to provide positive comments to recent information about possession costs, therefore enhancing rate trends as they hold.
Closely Equal Momentum And Absolute Momentum.
Momentum trading can be categorized in two categories: Closely Equal Momentum as well as absolute Momentum.
Closely Equal Momentum method is where the performance of various safety and securities within a certain possession class are compared versus each other, as well as financiers will certainly favour acquiring strong performing safety and securities as well as selling weak performing safety and securities.
Absolute Momentum method is where the behaviour of the rate of a protection is compared versus its previous performance in a historical time collection.
In money trading, either Closely Equal or absolute Momentum can be used. Nonetheless, Momentum trading strategies are much more frequently associated with absolute Momentum.
Just how Is Forex Momentum Strategy Employed?
Momentum can be identified over much longer durations of weeks or months, or within day-trading amount of time of mins or hrs.
The primary step investors customarily take is to establish the direction of the trend in which they wish to trade. Using one of a number of Momentum indicators offered, they might after that look for to establish an entry point to get (or sell) the possession they are trading. They will certainly likewise wish to establish a profitable as well as sensible departure factor for their trade based on predicted as well as previously observed levels of support as well as resistance within the marketplace.
Furthermore, they are suggested to set stop-loss orders over or below their trade access factor– relying on the direction of the trade. This remains in order to secure versus the opportunity of an unexpected price-trend reversal as well as undesired losses.
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