In this paper we test the results of buying securities that have been outperforming the market. We are told two rules in finance: “Buy Low and Sell High” and also “Past Performance is not a guarantee of Future Returns”. Yet many advisers and investors will recommend the best-performing securities based on that very assumption. This paper shows that to maximise returns, there has to be a different way to examine when a security should be bought. We do this by using the Relative Rotation Graphs (RRG) to test if absolute returns can be improved by responding to the relative strength performance of each security using RRG charts. The paper also explains the basic concepts behind the RRG and gives the results from testing in all market conditions.
CEO / Founder Optuma
As a Computer Systems Engineer, Mathew started Market Analyst (now Optuma) within 18 months of completing his degree. From that point on, Mathew has made it his mission to build the very best software tools available.