Trend Trading

In earlier chapter we saw that the major direction in the higher time frame is the trend, which can be up/down or sideways. Riding this direction from some where in the beginning to almost the end can be called trend trading in simple parlance.

This means that staying put with one's positions literally through thick and thin, till your analysis tells you that the trend has indeed changed. This looks simple but again in not for the weak minds. After holding a position for days with say 50% profit, you may see it coming to 5% profit before it goes to say 90% profit (if it does!). Thus two issues normally attack the holder of a position : the long, long time period with no activity and the gut wrenching movements in that time frame. So if one is an action oriented character, one can try those thrills in some other field as this can be the most boring profession for a chap. Also assuming you are smart and can identify the trend start and end fairly early, still you may lose about 30-40% of the total move before deciding to jump in and out. Of course in good trending times that balance will be nothing to sneer at. It can be pretty big numerically. After all some of the richest investors have been following these kind of methods with good success.

If one has the ability to be like a rock and stay put and does not need the money earned for day-to-day expenses can follow this line of action.