Buy when growing sell when falling with stop loss just like trading. (rule followed by rakesh jhun jhun wala).
sit on cash when no opportunities instead of loosing opportunity cost with sidelined stocks.
chase trends
ride winners ditch losers
Relative momentum strategy
- picking top 20 stocks which has good return (rate of Price change) on past 12 months.
- again next month track top 20 stocks high return in past 12 months.
- total 40 stocks now,
- ditch stocks those are not in top 40 add the 21th one to top 20.
- repeat every month
results 5 years study 2013 to 2018
cagr 31.18%
capital gain 3.9x
137 trades average hold 5 months
max drawdown (from top) 22.5%
wins 62% trades
avg win stocks 42% avg loss 12%
absolute momentum strategy
buy when stock price exceeds 200 DMA
Sell when stock goes below 200 DMA
buy at 200 DMA +5%
Sell at – 200 DMA – 5%
whiplash filter 5%
liquidity filter 1 cr turnover annually
results
200 dma 2003 to 2018 (15 years)
capital: 40x
cagr: 25.5x
max draw down 57%
461 trades average hold 11 months
wins 31% trades
return
average winner stock 117% gain trades loose -13.5% loss.
20 stocks in the list if they were in top 20
