Dual Momentum Explained: Trend-Following That Goes to Cash

Dual momentum picks the strongest assets (relative momentum) but only stays invested while the overall market is healthy (absolute momentum). When the market turns down, it moves to cash.

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The two momentums

Relative — hold the strongest coins in your basket.
Absolute — only hold while the market (e.g. Bitcoin) is above its moving average; otherwise cash.

Why cash in a bear market matters

Most long-term damage comes from a few severe drawdowns. Sidestepping the worst of them — even missing some rebounds — can mean a smoother ride and better risk-adjusted return.

The trade-off. Going to cash means sometimes sitting out a bounce and lagging a roaring bull run. The benefit is smaller drawdowns.

See it on real data

HeroQuant's dual-momentum strategy shows how it moves to cash in downturns, compared against buy-and-hold — free, no code. It's also the flagship behind the public live track record.

▶ Try it free on HeroQuant — no code, no API, no risk