Thanks. Food for thought. Will think over it in details…seems from quite a few replies, technical know-how is a must for MI.
Meanwhile let me answer to your queries.
1. I select top gainers 1 year.** Few of them also feature in top gainer 6 months as well. This is intermediate look back period. As per research short look back and long look back, both have reversal tendency. Intermediate look back has continuation tendency. Please note its tendency and not guarantee. Probability to be precise.
2. Identify Smooth chart - plain visual inspection. Then higher % of daily positives. Then calculate R^2 in excel.
3. Smoother charts have been proven to run longer without mean reversion - limited attention hypothesis. Small monthly dose of good news builds up instead of Big Bang announcement like RCom RJio partnership or Vishal Sikka exit.
4. Trailing Stop loss % - back test with 10, 15, 20 %. I found higher the better. But I am Bit loss averse so chosen 15%. Just good enough to avoid whipsaw but exit in a deeper correction. Open to enter when the stock regains momentum. No affection or dejection - but rule based.
5. What I found most difficult till now is not the above 4 points. It’s easy and my wife does it. I am not able to figure out a scientific method to differentiate between a whipsaw effects. Correction and drawdown crash. How to know that momentum is slowing - stock specific and portfolio level and maybe benchmark index level. That would enable absolute momentum. That is moving out from equity and parking in FD and again entering…kind of rotational ETF momentum strategy…
Nevertheless, keep your inputs coming. I take every input and criticism in right spirit