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Equities Market: Trend-Following Or Momentum?

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Although the main goal of both equity trend-following and momentum strategies is to catch outlier trades and trends, there are some unique differences related to their correlation with equity indexes and performance during periods of market stress.

What is a better strategy to use with equities? trend-following or momentum? When using a specific strategy, the answer depends on the objectives. Both trend-following and momentum have a huge optimization space. The choice of equities universe, lookback periods, position size methods, and a host of other parameters can differentiate between dismal or good performance. Therefore, the answers to the question posed are not straightforward.

Norgate Data provided the equity index series with delistings that enabled this research. We highly recommend this data service to those who want to backtest strategies on equity markets (we are not resellers and do not make any commission).  Without the use of series with delistings, the results suffer from survivorship bias.

The research results are available only to Trend-Following and All-in-One subscribers due to two main reasons:

  • AI bots are on the rise, scanning content and distributing it to millions of subscribers for a fee, all while denying credit to the original authors and posing as artificial intelligence.
  • Many other analysts or traders use the research results in podcasts and conferences without giving credit.

Unfortunately, we have noticed that the volume of high-quality free content has diminished due to the rise of “AI,” and we also think it is time researchers take action to protect their content because this new “AI” is not free. A few companies benefit from scanning and distributing intellectual property without providing any credit, using the same “AI” techniques to alter content to appear as “artificial intelligence.”

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Access to premium articles on trend-following and the rules of a strategy similar to the one generating the daily signals above is possible with a Trend-Following subscription. The strategy trades the same markets with the same risk and lookback period parameters.



Disclaimer: No part of the analysis in this blog constitutes a trade recommendation. The past performance of any trading system or methodology is not necessarily indicative of future results. Read the full disclaimer here.

Charting and backtesting program: Amibroker. Data provider: Norgate Data

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