Why Trade The Trend

Trading with the trend is one of the most important things you can do in the stock market. It automatically increases your odds of being correct.

There are 3 reasons why it is much better to trade with the trend then against it.

1. Likely to continue

Trends are likely t continue. If a stock is going up it probably will not start going down all of sudden. The reason for this is that people are generally more confident if the market is going up. A little bad news here and there is not going to have as much of an impact as it would if we were in a bears market.
Good news also seems 5 times better when it comes from an increasing economy rather than a fading one.

2. Can Make Big Moves

I have often heard that if you don’t get in at the bottom you are missing the majority of the move. That isn’t true. A stock can go up 50% from the bottom one year and still have another 500% gain in it. It amazes me how fast a stock can move when it is in an uptrend.

3. I wouldn’t want to be on the other side

Have you ever heard the saying, “If you can’t beat them, join them”? Well that seems to apply to the stock market as well. If a stock goes down 30% I do not become a buyer, why because odds are it will continue to go down at least in the short run.

But If I believe it will go down why not take a short position? After all it might be the only way to make money.

For more on learning stock trading visit http://www.stocks-simplified.com

For more on trend trading visit http://www.stocks-simplified.com/Momentum_Investing.html