Momentum
Buy what's already going up and ride the trend until it fades.
How it works
Momentum bets that recent winners keep winning and recent losers keep losing over horizons of roughly three to twelve months. A momentum investor ranks assets by trailing return, buys the strongest, and rotates out as strength decays. The edge is behavioral: investors under-react to news, then pile in late, stretching moves further than fundamentals justify. Positions are sized by relative strength rather than valuation, so price itself is the signal. Discipline lives in the exit rules, because momentum works until it violently doesn't. It is agnostic about whether a company is cheap or expensive, only whether its price is rising.
The trade-offs
✅ Strengths
- Historically one of the most persistent anomalies across markets and eras
- Simple, rules-based, and easy to backtest
- Captures big trending moves other styles miss
⚠️ Weaknesses
- Suffers sharp 'momentum crashes' at market turning points
- High turnover means taxes and trading costs bite
- You are always late to the entry and late to the exit by design
Publicly associated with
Naming a practitioner is historical, educational context — never an endorsement.
Legends who play this way
Play the Momentum style in Conviction League
Draft a critter that trades this way, train it on a simulated market, and backtest it on the leaderboard — free and fully simulated, so there's zero real-money risk.