How To Use Trend Following As A Market Strategy
Trend following is a market strategy that takes advantage of both the ups and downs of the market. It's a method that employs risk management to minimize potential losses. Traders who employ trend following enter the market after a trend has been revealed, they do not attempt to forecast trends. They determine how much to speculate in a particular issue based primarily on the dimensions of the trading account and the steadiness of the issue.
Traders who use trend following use software that's programmed to exit when a surprising declining trend in their issue happens. Then the traders wait to determine if the trend gets back on track before re-entering. It's truly about staying with an established trend and getting out if the trend changes direction.
Price is the 1st rule of trend following. Other indicators are not crucial, though they don't seem to be wholly overlooked. The second factor is the choice of how much to trade. The timing is less important than the quantity of the trade. Then there is the exit strategy. When to get out if the trade is unprofitable or if the trade is profitable. Eventually, you have to set a stop loss for the maximum sufficient loss.
These traders use their software to test trades before investing. The software can evaluate the hazards against the potential benefits of the transaction. The numerous factors important to the trade are programmed into the software and the trader makes his decision based totally on the outcome of the test.
Outside events can have an unforeseen effect on market trends. Man made and natural disasters and political disturbance can have either a positive or negative result on the market. As an example, when Hurricane Katrina damaged and annihilated oil rigs and pipelines in the Gulf of Mexico, oil costs immediately climbed responding to an anticipated shortage. Even though the shortage never materialized, costs remained high for several months due to speculation in both the commodities and market.
Obviously, all stock exchange investing is speculative. Following trends is a selected technique for utilising highs and lows in the market and using them to your own advantage. Unlike hot stocks, which involve holding stocks for extraordinarily brief periods, hours or days, trend following involves keeping stock for longer periods, though the basic principle is reasonably similar. In trend following one might hold the stock for a week or a month depending on the trend.
In the stock market there is no guaranteed system for earning profits. It is necessary to have a plan or you will actually lose cash. Trend following should by one of several methods you employ to maximize your gains and minimize your losses. - 23217
Traders who use trend following use software that's programmed to exit when a surprising declining trend in their issue happens. Then the traders wait to determine if the trend gets back on track before re-entering. It's truly about staying with an established trend and getting out if the trend changes direction.
Price is the 1st rule of trend following. Other indicators are not crucial, though they don't seem to be wholly overlooked. The second factor is the choice of how much to trade. The timing is less important than the quantity of the trade. Then there is the exit strategy. When to get out if the trade is unprofitable or if the trade is profitable. Eventually, you have to set a stop loss for the maximum sufficient loss.
These traders use their software to test trades before investing. The software can evaluate the hazards against the potential benefits of the transaction. The numerous factors important to the trade are programmed into the software and the trader makes his decision based totally on the outcome of the test.
Outside events can have an unforeseen effect on market trends. Man made and natural disasters and political disturbance can have either a positive or negative result on the market. As an example, when Hurricane Katrina damaged and annihilated oil rigs and pipelines in the Gulf of Mexico, oil costs immediately climbed responding to an anticipated shortage. Even though the shortage never materialized, costs remained high for several months due to speculation in both the commodities and market.
Obviously, all stock exchange investing is speculative. Following trends is a selected technique for utilising highs and lows in the market and using them to your own advantage. Unlike hot stocks, which involve holding stocks for extraordinarily brief periods, hours or days, trend following involves keeping stock for longer periods, though the basic principle is reasonably similar. In trend following one might hold the stock for a week or a month depending on the trend.
In the stock market there is no guaranteed system for earning profits. It is necessary to have a plan or you will actually lose cash. Trend following should by one of several methods you employ to maximize your gains and minimize your losses. - 23217
posted by X - Men @ 6:01 AM
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