Momentum Hedge
Hedging a core momentum based sector, industry rotation portfolio by using moving averages as the hedging (shorting) indicators.
This strategy invests equity using sector rotation as the core long position. It then tries to hedge the long position using moving average by taking short of S&P 500 if the moving average line is crossed downward. It will take off the hedge if S&P 500 is above the MA line.
This strategy is really just an instance of Moving Average Short.
- Sector rotation based on price momentum strategies. These include Sector Rotation Fidelity Select Funds and Momentum Based on FundX Scoring and others.
- Moving Average Short: Use Moving Average as a downside protection by shorting another security similar or related to the underlying security.
- Moving Averages Strategy for Equity: The standard MA strategy for various stock market indices or securities.
- Moving Average With Signal: Use MAs from another security as the trading signal for the underlying security.
- Moving Average With Two Signals: Instead of merely using one signal, use multiple signals (two signals) to make sure the trends are confirmed.
- MACD Strategy: Use faster and slower moving average crossover as signals to avoid whipsaw. Another similar strategy is Moving Average Crossover.
See Also
- Masonson, Les. All about Market Timing. McGraw-Hill Companies, 2003. pg 131-152.
- "Moving Averages", StockCharts.com - ChartSchool.
- "Moving Averages", Wikipedia.
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