Momentum Trading Strategy

Learn a momentum trading strategy for stocks using annual return and a 200-day moving average. This monthly rotational strategy identifies and trades top-moment

Published · Updated · Methodology: Technical Indicators

Part of: Moving Average Strategies

  • Methodology: Technical Indicators
  • Content type: strategy
  • Timeframes: Monthly (for ranking and trading decisions), Daily (for 200-day moving average and annual return calculation)
  • Markets: Stocks (e.g., Tesla, Nasdaq 100, S&P 100 index components)

Indicators used

  • 200-day Moving Average
  • Annual Return (Rate of Change)

Source video

Decoded from: Algo Trading Strategies: Momentum Trading (Complete Guide & Strategy) by Critical Trading — watch the original

Key timestamps:

  • 0:00 - Introduction to momentum trading
  • 1:25 - Example of a Tesla trade (70% return)
  • 2:45 - How to construct a simple momentum strategy
  • 3:00 - Strategy trades once a month
  • 3:05 - Uses stock's annual return to measure momentum
  • 3:15 - Holds maximum 15 stocks
  • 3:30 - Trades open only if stock is above 200-day moving average
  • 4:15 - Ranking system explained
  • 5:40 - Rotational momentum strategy explained
  • 8:00 - Profit distribution and win rate
  • 9:00 - Equity curve and summary of the model strategy

Strategy overview

A moving average is a smoothed line of past prices that most systems lean on as a reference for the prevailing trend. This entry decodes Critical Trading's "Algo Trading Strategies: Momentum Trading (Complete Guide & Strategy)", where the moving average is deliberately kept off ranking duty: the 200-day line works only as a trend-eligibility gate, while the decision about *which* stocks to hold is handed to a separate momentum measure — each stock's trailing annual return.

That split is what sets this video apart from most moving-average content. Rather than timing a single instrument off a crossover, it builds a cross-sectional stock system: candidates are ranked by how much they have returned over roughly the past year, the strongest names are selected, and the 200-day average governs whether the broader trend even permits participation. Critical Trading frames it as a once-a-month process that holds a capped basket — up to fifteen stocks — so the moving average and the return-ranking act as filter and yardstick rather than as a single entry trigger.

The video opens with a single-stock illustration — a Tesla trade — to motivate why recent strength can persist, before generalizing the idea into mechanical, portfolio-level rules. This page pairs that decoded angle with the source video so you can see how a rate-of-change momentum score and a long-term moving-average filter are meant to combine.

Topics

momentum trading strategy · pine script · trading strategy · tradingview strategy · stocks trading strategy · monthly trading · 200-day moving average · annual return · technical indicators · rotational strategy · s&p 100 strategy · stock momentum strategy

Frequently asked questions

What is a momentum trading strategy?

Momentum trading buys assets that have shown strong recent performance, on the premise that outperformance tends to persist for a while. Candidates are ranked by how much they have moved over a recent lookback window, and the leaders are held and rotated as the rankings change.

How does this strategy decide which stocks to hold?

It ranks stocks by their trailing annual return — a rate-of-change momentum score over roughly the past year — and selects the strongest, rather than using the moving average itself as the ranking signal. The video mentions holding up to fifteen names at a time.

What role does the 200-day moving average play here?

In this video the 200-day moving average works as a trend filter, not the entry trigger: it helps decide whether conditions permit participation, while the annual-return score does the actual ranking. The system is rebalanced on a monthly cadence.

How can I test a momentum rotation like this?

Backtest it on historical data across a basket of stocks before committing capital, paying attention to the monthly rebalance and the trend filter. Strategy Decoder extracts the structure of strategies like this one from video sources so you can study and evaluate them on TradingView.

About this strategy page

This trading strategy was decoded by Strategy Decoder's AI from a public YouTube trading video and turned into a structured, reviewable specification. In the interactive app this page shows the full entry and exit logic, risk management settings, the indicators involved with their parameters, AlgoWizard-compatible logic and a Pine Script export ready for TradingView backtesting — plus an automated backtest verdict when one has been computed for this strategy.

Strategy Decoder catalogs 2,229 decoded strategies. Each one is extracted with confidence scoring, cross-linked to the indicators it uses, and kept up to date as new videos are processed daily. Load this page with JavaScript enabled to use the interactive tools, or start from the strategy explorer to filter by methodology, market and timeframe.

Other versions of this strategy

More decoded strategies