Momentum investing buys shares that have risen more than others over the past months, on the observation that strong trends tend to continue for a while. It looks at price behaviour rather than at what the business is worth.
How it is measured
Typically by the return over the last 6-12 months, or with technical indicators such as moving averages and the relative strength index (RSI).
The risk
Trends can reverse suddenly, and momentum strategies trade often, which raises costs and taxes. They require clear rules for when to sell.
This content is general information, not investment advice.