If you follow my blog for some time, you know that the gist of my investment philosophy is to follow the market trends and manage the risk rigorously. This way of momentum investing has worked well in the past few years and it has been demonstrated by my Global Momentum Compass (GMC) Portfolio.
Very often, people ask me how I identify trends. I use both technical analysis (through the charts) and fundamental analysis (through my understanding about current market events). In this article, I will explain some basic ideas about how I use technical analysis to find investment opportunities.
Momentum investing is less known and understood among retail investors. However, “trend-following” is a widely adopted and proven technique used by professional investors. Not only it can be used for short term trading, it is effective for long term investing too. As legendary trader Jesse Livermore said,
Big money is not …