Top 5 Benefits of Using Relative Strength Boost Reversal Often Overlooked in the desire to simply buy and make money with stocks, ETFs or mutual funds. This, plus the factor that the name “relative strength boost” sounds intimidating and that many people just don’t get it.
As I wrote earlier, “Avoiding Mistakes With Relative Strength Reversals,” RSM-based analysis takes momentum analysis one step further by performing a comparative analysis of how strong the stock or bottom momentum is and even better, if set correctly, how strong is the boost. a particular ETF or fund compared to others. This compelling analysis from RSM therefore focuses on ticker symbols that are strong and have the potential not only to remain strong but to continue to rise; and when they fail, the analysis indicates that it is time to sell ”.
Profit n. 1:
This is one of the most proven technical analysis methods for finding consistent winning investments.
A multitude of books have been written on RSM, including Michael J. Carr’s Definitive Guide: Smarter Investing In Any Economy (currently out of print, but hopefully about to be reprinted soon).
Profit n. 2:
RSM works for all types of investments:
- Short term
- Long-term
- Moderate
- Aggressive
- Conservative
- Stocks
- ETF
- Investment funds
Benefit # 3:
The formulas that give the best results can be implemented even if you have no technical knowledge or are not a math expert, as they are an integral part of readily available investment software.
Different formulas, all related, offer the ability to decide which way to analyze RSM provides you with the relative strength momentum reversal method that suits your goals and personality.
Carr tries seven different formulas to determine relative strength:
- Alpha
- Normalized rate of change (ROC)
- Rear weight ROC
- ROC weighted to the front
- Price / moving average relationships
- Servings of multiple moving averages
- Average of different time periods
Benefit # 4:
Investment analysis with alpha or any other RSM method can be easily combined with other buy-sell rules in both personal investment software and investment advisory software.
These buying and selling rules include:
- It stops
- How long to hold a position
- Ranking to make sure the position is high among your group of ticker symbols
Profit n. 5:
You can perform a simple technical analysis with or without standard deviation (SD). By adding SD to the analysis, you can, in effect, be automatically more conservative.
Actually, with or without SD, you can optimize any RSM calculation as alpha to meet your conservative, moderate, or even aggressive investment goals with the right investment software.
While relative strength momentum investing sounds intimidating, the benefits can lead to long-term growth in your portfolio, particularly if you find a personal investment software program that transforms RSM in a few clicks of the mouse and allows you to compare earnings. and potential risks.