Building a Momentum Portfolio Using Python: A Step-by-Step Guide

Excited to share my latest article on Medium where I dive into the process of creating a momentum portfolio using Python. Whether you're a seasoned developer or just getting started with programming, this guide is designed to help you automate your stock selection strategy with ease.

?? Outcome

By the end of reading this article, you'll be able to:

• Understand the concept of a momentum portfolio.
• Write Python code to create your own momentum-based stock selection system.

?? Why Use Python (or Any Programming Language)?

Before diving into the code, let’s discuss why automating your portfolio building process with Python is beneficial:

• Efficiency: Save time and effort compared to manual methods like Google Sheets or TradingView.
• Reusability: Easily tweak the code for different strategies.
• Advanced Techniques: Integrate machine learning and other data science techniques seamlessly.
• Fulfillment: Experience the satisfaction of seeing your own code work as intended.

?? Prerequisites

To follow along with this tutorial, you need:

• Basic Python knowledge
• An understanding of simple rules for a momentum strategy
• Active participation to experiment with the code

?? Platform/IDE

I use Google Colab for this tutorial due to its free access to GPUs/TPUs and ease of collaboration. However, you can use other platforms like PyCharm, VS Code, or Jupyter Notebook.

?? Define the Strategy

We'll use concepts from the book “Quantitative Momentum” by Wesley and Jack to define metrics related to momentum and quality of momentum (smoothness).

?? Step-by-Step Code Implementation

1. Import Required Libraries
2. Read Ticker Data
3. Define the Time Period and Download Data
4. Calculate Weekly Close Prices
5. Calculate Momentum
6. Calculate Smoothness
7. Combine Momentum and Smoothness

?? Output

After running the script, you'll get momentum and smoothness scores for each symbol. You can filter and sort these symbols to identify top stocks for your portfolio based on your criteria.

?? Conclusion

Automating your momentum portfolio strategy with Python saves time, ensures consistency, and opens up possibilities for further enhancements. I encourage you to try the code, make your own modifications, and see how it performs with different stocks and time periods.

?? Important Links

• YouTube: MomentumLab_IN
• Twitter: MomentumLab_IN

Disclaimer: We are not SEBI registered advisors. This content is for educational purposes only and should not be treated as investment advice. Please do your own analysis or seek professional financial advice before making any investments. Past performance is not indicative of future returns.