Well, being a Momentum proponent myself and having manually backtested a strategy from 2018 (until I went live with it this Jan), I can tell you that there’s nothing right or wrong about either of the two approaches. Over a long period of time, you will see that you will have a decent share of such regret scenarios either ways. One might regret exiting at 15% trailing loss or one might regret not having exited. Doesn’t matter over the long term in my opinion. One should choose as per one’s psychological framework. The trailing loss approach will ofcourse result in higher churn which may not appeal to everyone.
This is also proven by the fact that the momentum indices published by NSE Indices have comfortably outperformed the broad based indexes and a lot of active funds as well ( in the respective category) by a decent margin even with a rebalance period of 6 months.
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