Trend traders aka riders are people than locate a trend on a market and ride it out until its end. This might sound easy, but it requires a lot of management and constant observation. If the stock goes up the trader is in the money. Trend riders don’t care about ups and downs that happened during the trend. The most important thing for this kind of the investor is that the price is going up.
The basics of trend trading
The trend trading is not for the meek and emotional people. To become a successful trend hunter, you have to remove the emotions from the business. Instinct is also obsolete in this business type. An individual that invests in this way has to follow predetermined rules. Any deviation from those rules might end in a partial or complete loss. It all comes down to the management of the risk. To do this properly, the investor has to use market price and volatility and the account balance.
The very nature of trend trading is the reaction to the market. It starts with the initial investment that has to correspond to the amount of the cash left on the account. As the market shifts up and down the investor has to increase or decrease the investment size. The point is not to be too jumpy and abandon an asset due to the fear of the price going down.
Why do people jump on the trend trains?
The question has several answers that we will list and several others you will have to find for yourselves.
Even the down market can generate a profit. But the trader needs to follow the ongoing trend all the way to its conclusion. An experienced trader will turn big cash around with a trend like that.
Contrary to other short-term trading that involves everything from fundamental analysis to assisting software like Online Wealth Markets, the trend rider doesn’t require the info those things provide. Once the investor located a trend and invests in it, the profit is guaranteed. The only unknown in that kind of the deal is the amount of the profit the trader will earn.
The job of the trend trader is to react to the trend and not to predict it. He will not predict the end of the trend or its beginning; he will react to the changes that happen. Predictions will interfere with the strict rules that compose this strategy, and they are a big no.
Trend rider will always aim at the maximum return, and that means to ride the trend to the very end. To achieve that and to maximize the returns the trader has to manage the risk. The investor has exit protocol that will get him out of the deal at any possible moment. That might reduce the returns, but if the trader decided that the risk exceeds the possible returns, then they will pull back. In that way, they will still have a profit which can be invested in other stocks.Read More