Advantages: By following the trend, you will not be affected by:
- Performance of companies |
The easiest and safest way to earn excellent profits consistently is to simply follow the trend and trade.
By following the trend, you will always be on the "right" side of the market.
Trend analysis helps distinguish emotional decisions ("I think it's time to sell...") from analytical decisions ("I will hold until the current rising trend is broken"). Trend analysis will also discourage you from going short in a bullish market or going long in a bearish market.
A trend is simply, the persistence of a security's price to move in a particular direction. A trend can be bullish, bearish or flat. Also, a trend is in effect till it is reversed.
Markets are either bullish, bearish or flat. However markets never go up or down in a straight line. There are always corrections (in bullish markets) and pullbacks or relief rallies (in bearish markets). By identifying trends and reversals, you can enter and exit trends at the correct time and earn excellent profits with minimum risks.