The Golden Rules of Trend Trading

Various investors at one time or another heard of trend trading but most don’t really really know what it means or how to start. Inside the enormous words of Wikipedia, “Trend following is a great investment strategy that requires good thing about long-term moves that seem to be to play away in various markets” but isn’t that what most long-term investors make an effort to do? fusionex

What Exactly Makes a great investment Strategy a Trend Trading Strategy?

By simply definition, while you are a tendency trader, you follow a trading system therefore you adhere with it for the duration that your system requires. It’s pretty simple, really: You create or find a system that you trust to be successful more than a length of time. You get to the point of having faith in that system because you, or whomever has proven the system, test and back-test the numbers until you reach the point that you can be sure that your system will make money. That is important to adhere with that system, regardless of what. Easy to summarize, but somewhat tricky to implement.

Do not get myself wrong, trend trading just isn’t rocket science. This can be a valid investment strategy that has made billions of us dollars over decades. It uses various indicators to determine market trends and profit from both sides of that market, enjoying the profits from both ups and downs of the markets. This up and down movement, the movements, is what makes successful trades, rather than how well industry is doing on a given day.

All of us all have an idea at heart when we hear the word “trend, ” but for investment, it’s about much more than what is “hot” at a given time like Fall Fashions or current video games. Is actually more about sticking with your system and it is styles, as it is about spotting a trend.

Really about finding a system you trust, sticking with that system whatever until you ride your tendency, and you will make profits similar to world class hedge funds. For example, Warren Buffett is a very famous trend trader and it’s not unusual for large funds to make over 1000% profits. Genuinely.

Decades of Proven Income

Trend following has recently been strongly documented considering that the fifties when Richard Donchian printed a trend following e-newsletter that became quite popular and it got popular again when the book Marketplace Wizards: Interviews with Top rated Traders (written by Jack port D. Schwager) arrived.

A single of the most famous stories ever that rises among traders is recorded in this guide and it’s about “The Frogs. ” Many known craze traders today are associated to the Turtles or try to emulate them.

The story of the Turtles is actually very similar to “My Great Lady” whereby a mentor bets a wealthy lady that he can require a lower-class woman, pop some nice clothes on her and teach her to speak appropriately and use proper diction, and the lady will pass as an upperclass woman. The rich man is aghast at this and declares it can’t be done. Unnecessary to say, it is possible and Audrey Hepburn marries the professor.

Therefore regarding “The Turtles, inch two well-respected (read: successful) traders had an discussion over understanding how to trade. 1 trader declared that great investors were born and not made, while the other trader, Richard Dennis, said people could learn how to trade and do well.

So they made a guess – for $1. 00. They got a tiny group of 14 people together, 12 men and 2 women – almost all of whom had never exchanged before – and trained them a simple trading system. They provided these 2 weeks of training, then gave them money to trade.

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