In last week’s article which you can read here. I discussed the reasons why I have incorporated momentum as a part of my broader investment strategy moving forward.
This week, I explore the methodology I have come up with.
Author Note: Whilst this piece is purely for the purposes of education, it is not intended to be a full exploration of the field of momentum or technical analysis. As with most fields of study and investment lore, there are many different concepts to be covered which are beyond the scope (and word count) of this article.
Stockopedia has a great resource written previously which is extensive in its education on all things technical analysis. You can read it here.
Rather, I am purely compiling this article for the benefit of those interested in the methods I personally have come to employ and my thinking around it. I hope that it can help in an investor’s own exploration journey.
There is also a good resource in Stockopedia which covers specific indicators and contains a lot more formal education. If you are interested, be sure to read it here.
There are a lot of indicators to choose from
Curated over a century of studies, much predating the age of computers, the study of technical analysis has seen many exponents develop a range of indicators to help improve the odds of getting on a stock’s right side.
Technical analysis is believed to have its origins in the 17th century. With examples of Dutch merchants using it in markets, through to Fishmongers in Japan using it to monitor the price of fish on the docks. Therefore, its not just the modern investor who has been fixated with the movements in prices. It has been going for as long as markets have allowed the buying and selling of goods and investments.
J W Wilder, WD Gann, R N Elliot, S Weinstein, R Wyckoff and hundreds (if not thousands) of other protagonists have attempted to find ways to help better predict price movements and get the numbers working in their favour.
So, this was my immediate challenge, how does one cover the breadth of such a body of work, when all I really wanted to do was make sure I knew when to step aside when things got rocky, and when to jump on when the train was pulling out of the station.
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