Momentum investing so attractive because it's so easy to do. The returns are great and the risk is low but the real benefit is how little time it takes to find attractive investments.
(PRWEB) May 14, 2012
“Two Well-Known Ways to Beat the Stock Market and the Unusual Method Everyone Misses” by Mike Sankowski has been published on the Trend Following 101 website, and in the current Trend Following 101 newsletter.
There are two well-known strategies that investors use to form a powerful profit making trading system, Mike reveals in the Trend Following 101 newsletter, which are:
1) Value Investing: Buying stocks that have more discernible value inside of their company than the stock market recognizes. Most notably, Warren Buffett is a value investor.
2) Small Caps: Picking attractive small caps stocks which then became large companies. Think: Peter Lynch.
But the Unusual Method that investors don't know about is Momentum Investing, according to Sankowski in the Trend Following 101 newsletter. Momentum trading uses the strategy to scan the markets for stocks that are already going up strongly and continue the trend.
This article corresponds with the launch of the new EZ ETF Trading Service by Trend Following 101, which uses Momentum Trading to create a stellar investing platform which to-date outperforms the S&P by 300%.
Mike Sankowski in the Trend Following 101 newsletter talks about how momentum trading works in the real world markets to create the EZ ETF System.
Since the EZ ETF System uses momentum trading, the markets traded by the EZ ETF System change according to market trends. This month's ETFs are XLU, PCY, and VNG but next month's ETFs can't be known yet. The markets that the system is trading right now is the International Bond Market, Real Estate, and Utilities, according to Michael Sankowski in the Trend Following 101 newsletter.
Momentum trading like in the EZ ETF System, Mike of the Trend Following 101 newsletter reveals, works best by using returns from the last 3 months. This time window is the ideal amount to calculate market trends. Momentum investing also tends to work better when you use two screens, according to Michael Sankowski of Trend Following 101. For example, look for stocks that went up strongly in the last 3 months, and went up in the last 30 days too.
Momentum investing is a not a buy and hold strategy. You can’t just blindly buy a stock that is going up today and hold onto it for years. "With momentum investing, you’ll need to rework your portfolio once a month to get the best returns," says Mike Sankowski in the Trend Following 101 newsletter. "But," Sankowski adds," switching ETFs once a month has big benefits: instead of holding onto losing investments, momentum investing gets out of bad trades before they can doom your account."
Not every trade ends up as a trend, and the market will go in the direction it wants to go, explains Mike in the Trend Following 101 newsletter, so just hop on and enjoy the ride. Subscribe to the free Trend Following 101 newsletter for more information.