I cannot see SHJ drifting much lower, particularly if SGH...

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lost com

2,587 Posts.

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08/02/16

17:07

Post #: 16969281
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Originally posted by bronkers ↑

I am not sure whether this is the appropriate place to go in-depth regarding momentum investing. It is fairly technical and there are a lot of nuances. I posted that link only to give you an idea. And to show you that there is evidence of price-based analysis working. Its not all brokers looking to charge as much commissions as possible, peddled by charlatans voodo hokum as it is usually put (although there is some truth to it...technical analysis has been hijacked by those people).

You are already on the wrong foot by starting off with the physics definition of momentum and formulas. In finance, it is completely different. It is just the concept that is similar. You are better off reading and researching about "trend-following".

The strategy doesn't pick the bottom or the top, so you will always miss out both ways

Yes exactly. You are trying to get the 'meat' of the price movement (see picture below).

There is no indication given by this analysis that the trend wont end immediately after you purchase the stock

Yes exactly. Trend-following philosophy is based on the premise that one cannot forecast accurately. Trend-followers do not know when to enter at the bottom or exit at the top. It is to capture any trend that starts to develop based on an objective, rules-based approach.

If the stock drops immediately after the trend finishes then you may end up being forced to sell lower than your threshold

This is why stop-losses and risk management are so critical. No trend-follower will ever take large losses 20% or greater (generally). It can vary a lot though because it depends on your level of diversification, asset classes and instruments etc.

By following this approach you would be exhibiting at least one of the psychological factors that you are attempting to exploit i.e. "investor herding"

What's wrong with that? Investor herding and other psychological theories are just theories we have come up with to explain the "drift" that is exhibited in markets, especially commodity markets.

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I cannot see SHJ drifting much lower, particularly if SGH continues to drift higher.

Still it is now quite a drop from .72 cents.

Last edited by lost com: 08/02/16

SHJ Price at posting: 63.5¢ Sentiment: Buy Disclosure: Held
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(20min delay)
Last 86.5¢		Change -0.045(4.95%)		Mkt cap ! $151.5M

Open	High	Low	Value	Volume
90.0¢	90.0¢	86.0¢	$36.01K	41.62K

Buyers (Bids)

No.	Vol.	Price($)
1	11403	86.5¢

Sellers (Offers)

Price($)	Vol.	No.
90.0¢	25332	2

View Market Depth

No.	Vol.	Price($)
1	11403	0.865
1	11034	0.860
1	10000	0.850
1	10000	0.810
1	2849	0.800

Price($)	Vol.	No.
0.825	1	1
0.900	25332	2
0.910	21182	3
0.950	2000	1
0.955	6045	2

Last trade - 15.59pm 07/11/2024 (20 minute delay)

SHJ (ASX) Chart

I cannot see SHJ drifting much lower, particularly if SGH...

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I cannot see SHJ drifting much lower, particularly if SGH...

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