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Momentum Investing and Income Investing work really great in a combo. After all the more things that are working for you the better.

Everyone knows what investing in dividend stocks is, but what in the world is momentum investing? Momentum investing is simply investing in uptrending stocks, simply because they are going up. Momentum investors invest with the overall and not against it.

For example if stock XYZ started making higher highs and higher lows wouldn’t you want to invest in it? Of course it is going up after all and shows no signs of slowing down.

Does it actually work? It can be the most profitable way of investing money, but this is only if you are doing it right. The biggest problem people make is that they use a buy and hold strategy on uptrending stocks, which may work great sometimes, yet terrible other times. For instance they may hold onto the stock as it goes from $50 to $200, but keep holding onto it as it comes back to $30 only a few months later.

The problem with stocks that make big upward moves is that what comes up will eventually have to go down. Because of this it is normally much wiser to stay into a stock as it is trending up, but then to get out as it shows the first signs of weakness.

If the stock starts to make lower lows and lower highs it shows that the former uptrend has stopped and staying in it can be financial suicide.

So how does this compare with income investing? It can work pretty good if you can find a nice uptrending stock that is also paying a high dividend.

In some cases the appreciation will far outperform the dividend but not all. There can be many times where you will hold a stock for months and end up breaking even; in situations like these it is nice to have another source of income on the stock so you at least made some money. The dividend will also help you to create an income from your stock while you wait to sell your stock, this can hold off the pressure to sell it too early.

Overall it seems that if you can find a dividend stock which is also in a nice uptrend it can potentially be a very powerful investment. But of course the dividend itself is not a good reason to stay in a stock that is turning against you.