Taking concentrated positions and pairing this with appropriate risk management can allow a trader to grow his/her account much faster than someone who is running a diversified portfolio of 40+ positions.

There are many other factors to address when running a momentum strategy. With today’s “different” market environment where individual stock moves are highly correlated with the broader market on any given day, a momentum trader has to pay attention to market direction and periods of strength/weakness.  Moves of 3%+ a day are becoming more common. This can provide more opportunity to a trader, but also can be a risk to those who do not have a clear risk management plan.  Trading a momentum strategy during a correction may damage your portfolio, but trading that same strategy during a bull move will earn you a good return.  The key is to identify periods of choppiness and weakness and to cut your exposure.  It is not just a game of trading, but also a game of waiting.  Those who seek action and want to trade every single day should ask themselves what they want out of trading. The goal of every serious trader should be to extract the greatest amount of return from the market, according to his/her risk parameters. What is the point of making a great return, only to give up half of it when the market corrects?

For the small trader, money management should be fairly simple.  There is no complicated hedging or balance of long/short positions needed.  Leave that to the larger funds. The number one goal should be too earn a good multiple on your invested capital.  Study market winners, the best stocks and the best traders.  No need to reinvent the wheel when you can use something that already works.  Don’t try to copy anyone or any method, bu