The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
We have looked at momentum trading on a weekly basis, but now we’ll take a longer-term view of the methodology.
The strategy covers all the shares in the FTSE 350, i.e. the combined FTSE 100 and 250 indices. It involves buying the six top performing companies over the previous two-month period, then closing the trades at the end of each month.
On data going back to 1986, this strategy would have provided an average return (on an unleveraged account) of 2.6% per month. No strategy can be profitable all the time, however, and this one is no exception; thus it calls for the careful use of stop losses (especially in a leveraged account).
For the past two months, the shares with the largest percentage return were as follows: