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Trend following by its very
nature is a system that needs to be adhered to. There is no point
in adopting a trend following strategy and then, if you think that
the market may be beginning to move, changing the way that you trade.
But trend following is following, it is not a way of knowing what
the market will do. If it were that then there would be no market
as everyone would invest in the same thing and there would be no profit
in trading. Trend following is a way of analyzing risk based on the
trend that you are following. It is a way of working out what you
should be investing in based on the current trend of that stock and
also what price you should be paying. This is called the initial risk
rule. Trend following is not a fashionable way of trading that is
being followed for a while until the next big thing happens along.
Trend following is a good solid and reliable way of trading that should,
if your analysis and application are good, be a reliable way to make
a profit. Of course there will also be times when you lose out, but
on the whole trend following has been shown to be a good system. One
of the most important things in getting it right, is knowing how much
you should trade for the trend that you are following. You also need
to trade in the context of the market at the time. |



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Trading and Stock Trading
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