Its going ok. Mixed results. Marketsmith take care of many things automatically. They provide RS rating, so u get ranking of high relatively strong stocks. They give EPS ratings…so fundamentally good stocks come undee your scanner. It provides group rank, so u knoe if your selected stock belongs to strong sectors. Many trading parameters get automated. So your work becomes easy. On weekly chart they even give you pivot point and chart patterns. I got mixed results, may be because market overall is sideways in last 1 year.
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Sounds good. Looks like, we can use it for positional trading. I will check it.
Yes, market has not been great, it was a testing market. Momentum is dissipating quickly. Hope it will be good from now.
Do you have stop losses or not keeping them, considering the trades are not based on technicals alone but are based on fundamentals also, so giving stocks some rope?
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MarketsmithIndia which is based on CANSLIM advocates 7-8% stop loss from your entry point at pivot levels. Personally , I dont follow it literally. Sometimes I try to base it on structure of the chart also. Sometimes , I dont apply also..but it is advisable to apply stop loss for volatile stocks to save your capital. Its more like insurance against big capital erosion.
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Hey @Mudit.Kushalvardhan Sir,
It’s long since you have posted, for students like us - it has put breaks on learning Momentum approaches.
It is very interesting journey, the way you switched your methods from:
- Value & Growth Based Stocks to
- Applying Stage Analysis (April’2024) to
- Rank-based Momentum Investing (Sept’2024) and
- Tweaking Rank-based Investing (Jan’25).
It’s a request if you could share your experiences in the Momentum Portfolio Journey i.e. From April’2024 change . How the individually followed strategy is yielding results (or you have stopped some part of it). And your advise if someone wants to follow similar approaches in their portfolio.
I am a “Fundamental Investor” and just recently tweaked my filters by using some momentum parameters like Stage + Volume + EPS Growth. I would just want to learn weather it is worth implementing on full scale in a Pure-Fundamental Portfolio.
Thanks,
What I observed , after following that rank momemtum is…I entered quite late after the upmove has been in advanced stage and also I exit only when, I have given up most of the gains…The better strategy to enter early and to exit timely to protect most gains…is to watch the chart and then enter…instead of blindly following the rank system…
Currently I am following Stage analysis with breakout positional trading…I watch chart and enter when chart is in stage 2 and for fundamental factors , I check marketsmithindia to check EPS ranking, RoE, ROCE, quarterly sales and quarterly profit and mostly CANSLIM criteria…But more focus is on Charts…I would categorise myself as a Positional Trader. And my performance in last one and half year has been very encouraging.
I am mostly following Stan-Weinstein , Mark Minervini and William O’Neil…taking their basic principles but tweaking them as per my own nature and requirements…
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Rank based momentum was doing good in first 4 months of my adoption of that style..but as the overall market momentum started waning after Sept 2024, slowly fewer stocks started coming in screener and mostly as I was entering at elevated levels and due to sudden downfall, was exiting in negative….I realised in short span that rank based strategy is making me enter after the upmove is in late stages , in the language of William O Neil, around 3rd or 4th bases and exiting me when the whole move is over and rank is reduced to low level, thus giving back most of the gains, if at all any gains…
So I stopped following rank based momentum strategy and did detailed study of Mark Minervini and Stan Weinstein and adopted their basic principles….And my performance improved, specially during the time ( Last 2 years) when overall primary indices are not doing that good. Now I have developed good confidence in this approach and feel that , this is something I can follow in all types of market.
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What are the returns like, did you calculate them? Is there churn or holding period is many months? What is the approach towards stop loss?
I have outperformed Nifty 50 by around 15% but that would not be appropriate comparison as most of the stocks I held during the period were from Smallcap , Midcap and Microcap universe…Compared to Smallcap 250 universe, 8% to 10% outperformance is there..
Holding period depends , but around 3-4 months, and sometimes 6 months also…
Stop loss has been based on overall structure of the chart, mostly recent swing low, instead of fix 7-8% but that also depends on many other factors…
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Interesting Sir, 8% outperformance if stays over a period of time, means a good alpha & portfolio formation. And with your stop loss strategy the drawdown during bear market would be limited to max 10-12% as i understand.
I have been reading lately about momentum and trying to include the factors like Stage Analysis, Volumes Confirmation, and Fundamental Trigger to take long term position.
I would be very thankful, if you keep posting about “Sector Identification through Stages” and “Stocks Identification” (only when you have exited, as a case study). Also, the errors to avoid while doing momentum.
Thank You!
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