Dual Momentum Trading System explained – finding winners

Published on December 1, 2022

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How to implement a dual momentum system of absolute and relative momentum. Systemise your investment process and enjoy superior returns

The aim is to construct a portfolio of assets with strong price performance that can outperform a global tracker / S&P500.

Momentum investing typically involves a 6 to 12 month measurement period to find the best performers, in this case exchange traded funds, ETFs. It then anticipates a further 3 to 6 months of strong price performance with the possibility of outliers that can carry on for longer time periods.

In its simplest format momentum investing would choose between stocks and bonds or between US equities and emerging markets equities. However in recent times the correlation between these asset classes has changed such that they can be under pressure at the same time.

By combining absolute and relative momentum I can see that although an ETF might be declining in price, if its relative strength is holding up then I know that this is due to market factors rather than a weakness in the ETF itself and I can stay in the trade for longer.

I use my dashboard file to find the best ETFs by county, sector, theme and factor. https://youtu.be/rDGvEgdc9Gw

I then use my relative strength file to discover how these ETFs rank amongst a universe of over 1000 other ETFs. https://youtu.be/Q83GbZmHB7w

This is then combined into a dual momentum google sheet and I use look at the correlation between the selections and the sharpe ratio of the selections in another google sheet. The files mentioned in the video are available here https://www.ebay.co.uk/itm/284975966624

Guide to my channel

I use google sheets a lot. For all the free files I have shared, have a look at this playlist

I’m keen on helping people to achieve financial independence. For videos on this topic go here

Exchange Traded Funds are a great way to invest cheaply and effectively.

Investment Trusts can offer exposure to exciting opportunities

The best funds I have come across have a playlist here

#momentuminvesting #dualmomentum #ETFs

Chapters
00:00 Introduction – aim of the dual momentum system
00:55 What is momentum investing?
01:47 Definitions of momentum, relative strength, trend, mean reversion, sharpe ratio
02:26 Pitfalls of momentum investing
04:07 A momentum system in action
05:00 Funds vs individual companies
05:28 Dual momentum strategy explained
07:02 Google sheets portfolio correlations & sharpe ratio, dual momentum system
09:02 Conclusion

Dual Momentum Trading System explained - finding winners, Momentum Trading Systems Reviews

Momentum Trading Systems Reviews, Dual Momentum Trading System explained – finding winners.

Popular Momentum signs

Momentum traders aren’t necessarily fretted about the fundamentals of the hidden property– such as its long-lasting development leads as well as the economic situations bordering it. All The Momentum trader normally appreciates is rate activity. This is why most Momentum traders rely greatly on technical analysis and indicators to identify when to enter as well as exit each profession.

Popular Momentum indicators consist of:

The Momentum indication

The Closely Equal strength index (RSI).
Relocating averages.
The stochastic oscillator.

Momentum trading summarized.

  • Momentum trading is the practise of acquiring as well as marketing properties according to the current stamina of price patterns.
  • They will open up a setting to make use of an anticipated rate change as well as close the setting when the trend begins to shed its toughness.
  • Momentum trading is based upon Volume, volatility and period.
  • Momentum trading works by enabling investors to identify the price of adjustment in a possession’s cost or Volume. As neither price or Volume will certainly continue in one direction forever, Momentum is usually thought of as an oscillating procedure.
    Momentum traders concentrate on cost activity instead of long-lasting growth and fundamentals.
  • Popular signs for Momentum trading include the Momentum sign, the RSI, MAs as well as the stochastic oscillator.

    Explore Trending Stories Relevant to Momentum Trading Systems Reviews and Financial market information, analysis, trading signals and also Foreign exchange investor testimonials.


    Forex Warning:

    Our solution consists of items that are traded on margin and also carry a danger of losses in excess of your transferred funds. The items may not be suitable for all investors. Please make sure that you completely understand the dangers entailed.


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