Ex-floor trader and hedge fund manager Trevor Neil is a director at RRG Research, a research company that uses its proprietary charting technology to provide insights for investors using relative rotation graphs (RRG), created by his fellow co-founder Julius de Kempenaer.
RRGs enable investors to distil the relative strength of hundreds or even thousands of securities into a single picture, which allows for an easy comparison that would otherwise take weeks to reproduce and be impossible to visualise.
Recently, Neil and de Kempenaer have launched an exclusive new product with CMC Markets, the RRG UK Momentum+ Signature Sharebasket.
But the story behind this product goes way back to when Trevor and co-director de Kempenaer first came up with RRGs.
Listen to the interview:
“We created this visualisation using this dynamic quadrant, which has a memorable look. It was first offered to users of Bloomberg and Refinitiv Eikon as analytics for professionals who manage portfolios to analyse portfolios and to look for early opportunities in securities, which were perhaps not yet the strongest securities, but were coming up in the list of performance with positive momentum,” Neil told Opto Sessions.
He went on to describe how RRGs have been harnessed in the new product offering with CMC Markets.
“Here we’ve got a product, which is based on the FTSE 350,” he explained. “We're concentrating on the 10 stocks that have the highest score according to our analysis of the relative momentum.”
“We're concentrating on the 10 stocks that have the highest score according to our analysis of the relative momentum”
Neil goes on to dig deeper into the factor-based strategy behind the product.
“Julius and I are both technical analysts and one thing we know is that momentum precedes price. If a market is going up, as it approaches a top — unless it's a V-shaped top —it will slow up before it turns down. Then when it turns down, it will speed up. But there's a slowing up and speeding up process,” Neil considers
“We're observing the increasing outperformance with positive momentum. That's very constructive, and that puts you in the leading quadrant on RRG. Then you might move into an area where you're still outperforming, but you're losing positive momentum.”
“We're observing the increasing outperformance with positive momentum. That's very constructive, and that puts you in the leading quadrant on RRG. Then you might move into an area where you're still outperforming, but you're losing positive momentum”
Neil concludes by reiterating the area of focus that he thinks provide an idea of what to watch. “The interesting area is securities that are underperforming but have got positive momentum. These are the securities that are coming up the list and coming up the list faster are the next best things.”
RRG UK Momentum+ is a new and exclusive product that can be available on CMC Markets. For more information, or to begin trading the product, visit the product page on CMC Markets here.
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