Defining Momentum Investing
- Momentum investing refers to a trading strategy where investors buy stocks that are rising and sell them when they look like they've peaked
- The goal of momentum investing is to attempt to benefit from volatility
- To do this, we attempt to find purchasing opportunities in short-term uptrends, then sell when those stocks start to lose momentum
- Typically, these trades are riskier compared to value or growth stocks
-
Specifically, these risks include any of the following:
- Moving into a position too early
- Closing out too late
- Becoming distracted and missing trends and deviations
References
Previous
Next