Momentum investing is a trading strategy of investing in stocks, capitalizing on them, on the basis of market trends. Momentum trading actually goes by a stringent group of rules based on particular indicators of a technical nature that drive entry and exit points related to specific securities. Some investors have made profits by having a momentum portfolio.
To understand what a momentum portfolio is, you need to know what momentum trading strategy involves first. Even before you do this, if you wish to trade, you have to open demat account online. You can do this on the portal of Motilal Oswal, one of India’s reputed brokers. Now coming to momentum trading, this is simply a strategy, assuming that some stocks rise in value in the short term. Stocks show a gradual rising trend, and when this happens, traders buy them. When they begin to fall, they sell them and move to stocks that show another gradual rising trend. Therefore, if investors hold a portfolio of such securities (the ones that are gaining momentum by climbing), they will offer investors good returns.
Something else to note about trading with a momentum strategy and forming a momentum portfolio, is to understand what a stock universe indicates. In any share market, there are literally thousands of securities to trade in. How do you choose which to invest in? You need to compile a list of stocks, exclusive to you as an investor. This is essentially your stock universe. This simplifies your investment, reducing distractions from other stocks. Within this universe of compiled stocks, you may find a smaller set to which you apply momentum trading strategy, tracking these accurately.
You may have got a good idea of momentum trading and what is involved in a momentum portfolio, but these handy steps help:
A systematic way for momentum trading to be successful is to establish a momentum portfolio. You can easily start or continue your trading career with helpful platforms like those of Motilal Oswal.
Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account | 10 Points to Remember When Operating your Demat Account | Types Of Demat Account & Trading Account
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