Momentum Stocks

Trading Momentum Stocks
Trading momentum stocks works for two basic reasons. It has been demonstrated that stocks that have been performing well tend to continue to outperform the rest of the stock market.

Momentum Stocks
Describes company stocks that investors hold in high esteem. (High yielding -- fast moving stocks)
Money-Center Bank ...

Momentum Stocks: companies currently in favor by investors (price/sales greater than 10, price/earnings greater than 35 or so).
Money-Center Bank: the largest banks such as Citigroup and Bank of America.

Because I'm of a value bent, that class of securities certainly has more appeal than big momentum stocks like Baidu, but I'm still extremely reluctant to invest in these smaller Chinese stocks.

Below are the top 15 high yield momentum stocks as of January 10th. Keep in mind that only 10 stocks are held in the portfolio and the current holdings can be viewed on the right-hand side of Scott's Investments.

Namely, momentum stocks are generally in the focus of most investors. This means that the price of the stocks and the P/E may be already high, which leads to your inability to purchase them cheap.

But whatever you do, don't jump into hot momentum stocks, with tens of thousand of dollars, and then try to figure out what the long-term prospects of the company are. This mistake is all too common and can be very costly.
Final Words ...

If you drawn to high-quality dividend paying stocks, your risk tolerance probably is moderate. On the other hand, if you are drawn to aggressive growth and momentum stocks, or quality small and mid-cap stock portfolios, ...

Choose a flat stop-loss percentage, or use a pattern in a lower time frame to signal when the trade goes against you. Second, look for the broad market to offer support for your strategy. Momentum stocks benefit from momentum markets.

momentum (technical-based) day or swing traders - they trade on high momentum stocks, in which it has high volatility. They need their orders executed lightning fast, and may need to get out quickly if the market goes against them.

See also: Stock, Momentum, Market, Long, Risk