How to Trade Momentum Stocks ?
A Thread on
Stock Selection
Relative Strength and Moving Average Use
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What is momentum trading ?
Momentum investing is a trading strategy in which Traders buy stocks at high price and sell even at higher price .
The goal is buying opportunities in short-term uptrends and then sell when the Stock starts to lose momentum.
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Skilles Required:
Skilled traders understand when to enter into a position, how long to hold it for, and when to exit; they can also react to short-term, news-driven spikes or selloffs.
Risks of momentum trading include moving into a position too early, closing out too late
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Identify the trend
Moving Averages Plot the Averge Price of a particular Period
Example : Whenever 21 ema is sloping upwards its called Shoterm uptrend
Whenever 21 ema is sloping downwards its called dowtrend
Whenever 21 ema is sideways its called consolidation
Refer image
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Rules :
Use this simple trend following system to buy and sell stocks
Works well in trending market and trending stocks
Ideal place to sell a stock is its moved more than 15% away from 21 ema in 3 days
Risk increases the farther you buy from 21 ema
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