Quantitative Momentum Strategies

Discretionary momentum investing requires constant judgment calls under emotional pressure. Quantitative momentum removes the judgment — and with it, most of the behavioural errors that cause discretionary momentum investors to underperform the factor they are trying to exploit.

Why This Matters

Quantitative momentum strategies systematise the selection, sizing, and rebalancing decisions that discretionary momentum investors make manually, replacing them with rules-based algorithms. The academic evidence suggests that rules-based implementation consistently outperforms discretionary implementation of the same factor because it eliminates the behavioural drag from anchoring, loss aversion, overconfidence, and regime confusion that affect all human decision-makers.