Follow The Trend

Everyone has heard “The Trend is Your Friend”. If you follow the trend you can make money. It doesn’t matter if the trend is up or down, if you follow it, you will make money.

This is easier said than followed. If you’re like me, you spend a great deal of time poring over charts and graphs trying to find a stock that is in a trend. I’ve used candle sticks, moving averages, and just about every other charting trick to try and identify where the trend is going. The secret is to try and find the trend when it is starting and follow it until it changes.

It looks so easy when you read about it in the book, but boy is it ever so hard to actually implement. I’ve even tried to design my own trading strategy using technical analysis. It is so easy with the charting software; you can do some back testing to try out your great theory that is going to set the world on its edge. I confess, one of the tricks I’ve tried was using the 10 day moving average crossing the 30 day moving average as a turning point. Sometimes it works, sometimes it don’t. I still am experimenting, searching for the perfect system.

One thing that I’ve discovered is that what works for one person does not necessarily work for another. It comes down to temperament and discipline more than anything else. If you can follow a system, remained disciplined when everything is moving so fast, and have the temperament to face the losses that come your way, you can be successful trading in the stock market.

There are dozens of systems out there, some are better than others. You have to take the responsibility to research how the system works, learn the ins and outs of it. And then, you have to face the question, do I have what it takes to trade this way. You have to be honest with yourself, because if you aren’t, you will lose your shirt. That much, I can guarantee.