Thread by @PradeepBonde

Momentum is stocks tendency to move in the direction of prevalent trend. You can use momentum to select stocks to swing trade or position trade. 🧵

Momentum can be calculated in many ways and the period and specific method used to calculate momentum depends on your goals and holding periods.

Momentum is often used to rank stocks and then top 25 or top 50 or top 200 stocks are selected for swing or position trades. This kind of momentum is relative momentum or relative strength.

Momentum can also be used to identify when a stock has entered momentum phase and when the momentum has ended. This kind of momentum is called absolute momentum. This is very useful to get in to a new trend early.

Momentum based trading strategies have big advantage as they allow you to put your money to work in fastest moving stocks. Momentum stocks have velocity and as a result you make higher returns by buying or shorting high momentum stocks.

Quality of momentum is important . Persistent momentum is good for longer duration holding periods. All persistent momentum phases ultimately end so it can also be good to find mean reversion trades

When momentum persists for a long duration there are always large players at work. If you analyse stocks with persistent momentum to upside or downside you will learn about some of the catalyst that drive the move.

While relative momentum ranking is very common , very few traders I have seen focusing on persistent momentum.

There are many ways to create persistent momentum scans in TC2000. The CountTrue, SinceTrue and TrueInRow function is very good for this. Using them you can find stocks with persistent momentum.

Using CountTrue, SinceTrue and TrueInRow you can create conditions to look for stocks that for example are above their moving average for X days in a row or find stocks that have more negative days than positive days in say 40 days.

There are several advantages to going beyond vanilla momentum ranking and looking at persistent momentum. If you are serious about making money , focus on persistent momentum.