Thread by @kaushikaki

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Did you try predicting momentum in stock but failed? This thread is for you.

In this tread, we will discuss the concept of Momentum Trading using Relative Strength to identify a perfect trade setup which will have high accuracy and small SL.

Strategy Thread 🧵⬇️

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Relative Strength is a behaviour of stock w.r.t Benchmark or Sector. That means it is a method of identifying stocks or instruments that are relatively strong or weak either against benchmark or sector.

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If you are following me for some time now, you know what is momentum.

If not, check out my Twitter Thread on RSI

https://twitter.com/kaushikaki/status/1467134735117922309?s=20

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Let us understand the setup

- For Bullish, relatively strong stock in strong bullish momentum
- For Bearish, relatively weak stocks in strong bearish momentum

The concept of strong momentum is explained in the RSI Twitter Thread and YT video:

5/12
Bullish Trade Setup

Conditions:
1. Relatively Strong Stocks against Benchmark and Sector for a period of both 1 Week and 3 Months
2. RSI above 70

Software Credit: @mystockedge

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Bearish Trade Setup

Conditions:
1. Relatively Weak Stocks against Benchmark and Sector for a period of both 1 Week and 3 Months
2. RSI Below 30

Software Credit: @mystockedge

7/12
Creating Scanner using @mystockedge

Step-1) Go --> My StockEdge
Step-2) Click --> My Combo Scan
Step-3) Create a Scan
Step-4) Create Bullish Scan
Step-5) Create Bearish Scan

8/12
Bearish Trade Example
1. #DIVISLAB
2. #BERGEPAINT

9/12
Bullish Trade Example

As the current market cycle was bearish, I did not get enough examples. But found few upcoming trades. This will put my strategy to test

Let us evaluate the strategy together
1. #TVSMotors
2. #DRREDDY

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Credits:

I learnt the concept of Relative Strength from two stalwarts of financial markets:

@Prashantshah267 from his book 'Outperforming The Markets using Relative Strength'
@vivbajaj, having the privilege of working with him and discussing markets on a regular basis.

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If this thread helped you, please re-tweet the first tweet and help others in their learning curve. This will also help me to reach a larger audience.

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If you like my content, follow me at @kaushikaki

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