Momentum investing vs noobs

[Rabbitone]

Some kinds of momentum trading use “… trade when a security is making new highs…” These can work excellent with a tested entry, a good volatility stop and well defined target.

I did very well with momentum set ups during the late 1990s when the market went vertical. It does not mean if today the stock made a new high today buy some tomorrow! It means find a set up that works consistently in momentum stocks.

Just look at Apple for the last few years prior to its recent pullback. You could have done quite well because there were many excellent momentum set ups when Apple had good upward movement.

Now if you are a momentum investor than ULTA is a great momentum play today (say the experts). That is now that it has weekly momentum and you plan to hold for five years.

Using the terms “Buying, Momentum, Investing, Trading, …” without the constraints such as entry, exit, risk, reward, position size …” tells us little about what you are trying to accomplish. . Anybody who uses “hope” in the context of a trade is not a trader.

Quote from konviction:

if you take a look at ULTA (daily), momentum investing(or trading, whichever) says to buy at these highs, in hopes it goes higher. Seems rather foolish to buy here. My 2 cents.

 

[konviction]

^ I'm telling you what I've read off websites and am paraphrasing. I have not yet taken any momentum trades yet.

 

[ElecEquity]

Quote from murray t turtle:

====================

Conviction Trader;
Finding it will not be the hard work;
study IBD books/website/free 10 day newspaper trial.
%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%

Also momentum is correctly defined as a ''price speedometer'';
nothing to do with direction, nor would i nickname/name IBD Can Slim as momentum trading/investing. But its real helpful.....

And make sure you borrow or buy book by Mr William O Neil[IBD founder , newspaper started up off his long/shorts stock sales!!!!!]];
book on Selling Stocks Short.[Note his wise use of 50 dma, 200day averages.....................] I could sell you my copy, but i like my copy too much.LOL.

And as far as ''hope there is no correction''my friend, forget that;
bull trends & bear trends always have corrections. Wisdom is profitble to direct......................................................

+1 Momentum trading works if you put in a little work.

Konviction, there's an abundance of information available in the public domain if you're willing to find that information and put together a strategy. As far as ULTA or any other leading stock is concerned, there are times to buy during a pullback or during a breakout that are lower risk and times during each of those situations that are higher-risk buy-points. If you put in some work, you can figure it out. Good luck.

 

[Rabbitone]

It is often easy to spot those who have never traded before (I am not referring to you). Newbies for example have some distinct traits. One trait that comes up over and over again is they reek of fear from what will come after the price bar on the hard right edge of the screen.

Veteran traders on the other hand who have paid the price of burning their eyes out in screen time are not intimidated by that hard right edge. They understand what to look for from these price bars. Momentum is just one of many characteristics used to describe price bars. It is just a piece of the trading puzzle.

When I look at the hard right edge price data on a daily chart it may be a momentum trade today, a swing trade during congestion and a then volatility set up trade after a big announcement that moves price. You trade what the price bars give you that has a high probability of working.

However if you are momentum trading you may be on a weekly or monthly chart finding a set up that will give you an entry from the hard right edge for may be 3 months to a year or more. Then you wait for the next momentum trade.

Quote from konviction:

^ I'm telling you what I've read off websites and am paraphrasing. I have not yet taken any momentum trades yet.

 

[Handle123]

I have always found stock trading/investing to be much easier than futures, but most invest or trade on too short of a timeframe in my opinion.

I first look at fundamentals, want to see expanding sales for last 6 quarters.

Then use weekly charts, just couple moving Ema and wait for pullback and buy above. Really don't have to reinvent the wheel.

 

[savagemp5]

Sorry to announce this news. Not sure how many sell-side services, mutual funds, and training companies will hate me.

Btw I see myself somewhat successful in trading. I went for an interview, sell-side equity analyst. I wasn't able to quite agree with the interviewer, with the part on due diligence.

Sad to say, the only people who uses these so called indicators, signals, momentum, swing, etc etc etc are YOU the Retailers, cut. People like you and me with less than 100k acct size. And who are selling ? The brokers, book authors (who failed at trading, or never traded), the course teachers, and the basic "finance industry".

Picture this. Investment/private bankers approaching rich clients to buy products. If its so good, why don't they buy it themselves ?

Then again, similar, if its so easy to trade, (either long/or short 50-50 chance) why don't the brokers setup mutual funds and trade for you clients, rather than "selling" the products. whatever you call it, charts, techs, etc. Similar, the book authors, trainers, etc etc...

Think about it again.

 

[Rabbitone]

So… you are some kind of super trading Guru who is posting here to set us all straight on how we should be trading? That is hard to believe from a newbie who has 22 posts and just joined last month.

I can’t wait to tell the wife that you said the the trading profits that bought our summer cottage were a figment of my imagination. She is going to tell you to…

Think about it again…

Quote from savagemp5:

Sorry to announce this news. Not sure how many sell-side services, mutual funds, and training companies will hate me.

Btw I see myself somewhat successful in trading. I went for an interview, sell-side equity analyst. I wasn't able to quite agree with the interviewer, with the part on due diligence.

Sad to say, the only people who uses these so called indicators, signals, momentum, swing, etc etc etc are YOU the Retailers, cut. People like you and me with less than 100k acct size. And who are selling ? The brokers, book authors (who failed at trading, or never traded), the course teachers, and the basic "finance industry".

Picture this. Investment/private bankers approaching rich clients to buy products. If its so good, why don't they buy it themselves ?

Then again, similar, if its so easy to trade, (either long/or short 50-50 chance) why don't the brokers setup mutual funds and trade for you clients, rather than "selling" the products. whatever you call it, charts, techs, etc. Similar, the book authors, trainers, etc etc...

Think about it again.

 

[savagemp5]

Quote from Rabbitone:

So� you are some kind of super trading Guru who is posting here to set us all straight on how we should be trading? That is hard to believe from a newbie who has 22 posts and just joined last month.

I can�t wait to tell the wife that you said the the trading profits that bought our summer cottage were a figment of my imagination. She is going to tell you to�

Think about it again�

- The people who are actually making money have no time for this.

- Does the no of posts determine how successful you are trading?

- Do you have 1m in cpaital ?

- You sound like a kid. Who cares what you tell your wife.

- I thought I wld be able to share ideas with fund managers, not retail traders.

- Cut, peace. I am here to make money, not enemies.

 

[Ghost of Cutten]

Nothing can beat simply studying momentum intensely for a long period of time, trading it with moderate amounts of capital, and getting experience. Keep a trading diary to record all your observations, insights, experiences, mistakes, successes and so on. Look how momentum-driven markets and stocks act - how often do they correct and pull back, how deep are the corrections, how long and big are the continuation trends etc.

You will learn more from that than any post, book, online article or whatever. Ultimately nothing beats simple elbow grease.

 

[DTB2]

if you take a look at ULTA (daily), momentum investing(or trading, whichever) says to buy at these highs, in hopes it goes higher. Seems rather foolish to buy here. My 2 cents.

Bringing up this old thread, not to bash this poster but to demonstrate the folly of everyone having an opinion. Your opinion will not make a dime's worth of difference in your success or failure trading. As the chart shows, it would have been a great time to buy ULTA.

The key is position sizing and being able to stay in this trade.