Some investors look for undervalued stocks. Others focus on income. Momentum investing takes a different approach. It is based on the idea that assets that have performed well recently tend to continue performing well for a period of time.

Momentum investing is widely used by traders and also appears in many systematic and factor based strategies. Understanding how it works helps investors decide whether this style fits their goals and risk tolerance.

This guide explains what momentum investing is, how it works, and why it attracts both supporters and critics.

What Is Momentum Investing?

Momentum investing is a strategy that involves buying assets that have shown…