1) The document discusses momentum trading strategies, including stock selection criteria focusing on earnings acceleration, net profit growth, and price momentum. 2) Key aspects of the strategy are determining formal buy points based on volume changes and support levels, and setting stop losses to limit risk on each trade. 3) Position sizing and risk management techniques are emphasized to avoid large losses and compound gains over time. The strategy aims for high win rates with controlled risk per trade.

1. Momentum Trading
Compounding the capital and success
LAI Chun Hung | HKU | 2nd in Trading Score

2. Page number 1
Lai Chun Hung; The University of Hong Kong; Rank 2
Momentum
Trading
Strategy
Stock Selection
What to buy
When to buy
When to sell
Portfolio Allocation
Emotion Control
Position Sizing
Trading Advantage
A good strategy can be duplicated
and applicable for different traders.
However, the most important is
traders’ discipline and consistency
FA & TA
Supply & Demand
Risk & Reward

3. Page number 2
Lai Chun Hung; The University of Hong Kong; Rank 2
Stock Picking
Sell more
Raise price
Cut costs
Fundamental Analyst
How can a company earn more?
Does P/E, PEG or P/B matter?
Look For these items
Earnings Acceleration
(Quarterly and Yearly)
Net Profit Acceleration
Positive EPS Growth
Screener
• Quarterly & Yearly sales growth > 0%
• Quarterly & Yearly net profit growth > 0%
• Stock price > $10
• Market capital > 10 Billion (HK), 5B (US)
• 50 Average Turnover > 10 Million
Other Considerations
• Market index
• Industry co-movement
• Innovation / Blue ocean market
• Catalysts

4. Page number 3
Lai Chun Hung; The University of Hong Kong; Rank 2
“The trend is your friend”
The question is how to identify TREND?
Trend Template
Stock price is above both 150 & 200 SMA
Stock price is below at most 25%
of its 52-week high
50 > 150 > 200 SMA
200 SMA is trending up for
at least 1 month
Technical Analyst Examples in the competition

5. Page number 4
Lai Chun Hung; The University of Hong Kong; Rank 2
Supply & Demand Analysis
Stock price raise only when demand > supply
Credit to Mark Minervini
Formal Buy Point
After consolidating / slightly contracting (usually within 10%2)
when the volume decreases3 at that time. Buy when the stock
passes last “high point” in huge volume day4.
Cheat Buy Point
Buy at low volume day with reversal candle stick pattern.
It captures a greater return but also with a higher risk
Volume, instead of the pattern1, clearly describe the war
between buy side and sell side. Pattern is the result but
not the cause. Focus on the price-volume action.
Major Thought

6. Page number 5
Lai Chun Hung; The University of Hong Kong; Rank 2
Example of Buy & Sell point
Entry: 460
Stop-loss: 4.91%
Exit: 510
Profit: 10.36% (2R)
Maximize return &
Limit the risk?
Position Sizing
FA
TA
Price-volume

7. Page number 6
Lai Chun Hung; The University of Hong Kong; Rank 2
Focus on the risk and reward (R). Usually sell half position when RR is greater than 2.
Take how much LOSS to get the GAIN It relates to emotion control
Exit Point
Risk Management Position sizing
• Holding 4-10 stocks on average
• Maximum loss of a single stock is 10%
• Maximum portfolio of holding a stock is 33%
• Maximum loss from one stock is 2% of portfolio
• When whole portfolio face 8% loss, stop
trading and adjust the strategy
 Cut loss small
 Risk exposure
 Compounding success, not failure
(Appendix 1)

8. Page number 7
Lai Chun Hung; The University of Hong Kong; Rank 2
Portfolio Allocation
No sector limitations
Only choose the “best” stock
Strong market is preferred
(depth and width)
Trading Advantage
Win rate
Aver. win Aver. loss
51.67%
9,367.62 3,027.01
Keep an eye on Risk-Reward relation
(Appendix 3)

9. Page number 8
Lai Chun Hung; The University of Hong Kong; Rank 2
1. Seldom “short” stocks
The maximum return from shorting a stock is 100%
2. Sell into strength
You cannot sell at the highest point every time
3. Avoid big loss
Big loss requires supreme return to recover the initial (Appendix 2)
4. Eliminate the thought of buying at the lowest
Profit comes as long as your selling price is higher than buy point
Extra Notice
Failure is a must element of success,
as long as the expected return in long
run is positive, that is a good strategy

10. Page number 9
Lai Chun Hung; The University of Hong Kong; Rank 2
Appendix
1) FA- Other Considerations
1.1) Market index
Relative strength of the market index. Measured by the percentage of increase
1.2) Industry co-movement
In the past decades, Ford increases when GM increases. Always look for the best 2-3 stocks of the industry.
1.3) Innovation
New technologies emerge and would have a strong potential gain. Just like doc-com stocks in 2000.
New energy car in last year.
1.4) Catalysts
Earning reports, approval from FDA and integration etc would ignite the turnover of the stocks
2) High volume day
eg: If the volume of the stock has half of the total volume of yesterday after the market opens 2 hours only

11. Page number 10
Lai Chun Hung; The University of Hong Kong; Rank 2
3) Exit point
It is one of the most difficult problem. After buying a stock, we only can control the timing of selling a stock.
It is of paramount importance that decide the selling point before buying a stock.
Sell at stop-loss point. If the stock movement is not as expected, sell it.
If the profit arrives 2R, stop-loss should set at the buy point. Keep raising the stop-loss when the price goes up.

12. Page number 11
Lai Chun Hung; The University of Hong Kong; Rank 2
5) Loss and breakeven
Return each time Frequency Total Return
10% 8 114%
20% 4 107%
100% 1 100%
4) Compound effects
of return in trading

13. 6) Always break out and pull back. Stick to the plan and see whether new buy point would occur.
Page number 12
Lai Chun Hung; The University of Hong Kong; Rank 2

14. Page number 13
Lai Chun Hung; The University of Hong Kong; Rank 2
https://docs.google.com/spreadsheets/d/1LgZ7xj7iy20ABKZb9RLv8nf2n-nUBPiP38nODlOAOlc/edit?usp=sharing
6) Trading Advantage
Wide choice of stocks. Traded 60 stocks in total but the trade frequency is relative low
Focus on risk more than return
Make use of margin

15. Page number 14
Lai Chun Hung; The University of Hong Kong; Rank 2
7) Average up, not down
The position of 2nd entry should be 1/3 or ½ of the 1st entry so the average price would not be
pushed sharply.