Investing With IBD
Ep. 231: Thomas Carr: 3 Keys To Momentum Trading
Aug 24, 2023
Dr. Thomas Carr, founder of Befriend The Trend Trading, shares his keys to momentum trading and research. He discusses market conditions, pullbacks, profitable trades, hedging, and the influence of the dollar on trading. He also analyzes the performance of Upstart, the appeal of momentum trading, and provides tips for success. The chapter concludes with a discussion on building a momentum trading system using MarketSmith and analyzing selected stocks.
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Quick takeaways
- Momentum trading relies on finding stocks with price momentum, positive earnings estimate revisions, and favorable valuation.
- Diversifying trading approaches, maintaining emotional discipline, and starting with small positions are keys to successful momentum trading.
Deep dives
Momentum Trading and Market Trends
Momentum trading is discussed as a short-term approach to capitalize on stocks that are in favor with the market. The importance of finding stocks with price momentum, positive earnings estimate revisions, and favorable valuation is emphasized. The scan parameters for selecting momentum stocks are explained, including price-to-sales ratio, EPS estimate increase, relative strength rating, and analyst support. Examples of stocks that pass the momentum scan, such as Celestica and Liberty Energy, are provided and analyzed.
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