What is momentum investing?
- Momentum investing is a strategy where investors buy stocks that have been rising in price and sell those that have been falling.
- The idea is that stocks with strong recent performance will continue to perform well in the short term due to investor demand.
- Traders use technical indicators like moving averages, Relative Strength Index (RSI), and volume trends to identify momentum stocks.
- This strategy relies on market psychology, assuming that trends persist before they reverse.
- While momentum investing can lead to quick gains, it also carries high risk, as trends can reverse suddenly due to market corrections or unexpected news.
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