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Stocks & Commodities V. 26:11 (26-30): The Keys To Trend-Following by Donald W. Pendergast Jr.
Stocks & Commodities V. 26:11 (26-30): The Keys To Trend-Following by Donald W. Pendergast Jr.
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The Keys To Trend-Following by Donald W. Pendergast Jr.
Weekly Trend-Following With EMAs. Successful trend-following requires time, patience, an unshakable belief in the power of statistics, and, above all, the willingness to fearlessly seize prime trading opportunities.
It can be a challenge to time the markets on a short-term basis, yet that seems to be the driving motive behind the marketing of most trading systems, charting packages, and stock/option newsletters. This article provides a simple framework around which technicians could build a simple and profitable trend-following method. Weekly trend-following takes a longer-term approach, allowing fundamental supply/demand forces to create opportune, low-risk technical entry points.
TREND-FOLLOWING ESSENTIALS
When a stock, fund, exchange traded fund (ETF), or commodity breaks out or develops other characteristics that imply a major trend confirmation, the smart money will initiate positions once the move is already under way, following the emerging trend. It is the opposite strategy of those traders who (sometimes unwisely) attempt to pick tops and bottoms or attempt to predict market reversal points. Trend-following will never get you in at the beginning of a market move, but it does ensure that the market will already be moving in the desired direction before you invest your trading capital.
The goal of the successful trend-follower is to profit from the primary thrust of every sustained long-term trend movement. If such traders can keep the losses on their losing trades small, they can still enjoy worthwhile profits over time.
Weekly Trend-Following With EMAs. Successful trend-following requires time, patience, an unshakable belief in the power of statistics, and, above all, the willingness to fearlessly seize prime trading opportunities.
It can be a challenge to time the markets on a short-term basis, yet that seems to be the driving motive behind the marketing of most trading systems, charting packages, and stock/option newsletters. This article provides a simple framework around which technicians could build a simple and profitable trend-following method. Weekly trend-following takes a longer-term approach, allowing fundamental supply/demand forces to create opportune, low-risk technical entry points.
TREND-FOLLOWING ESSENTIALS
When a stock, fund, exchange traded fund (ETF), or commodity breaks out or develops other characteristics that imply a major trend confirmation, the smart money will initiate positions once the move is already under way, following the emerging trend. It is the opposite strategy of those traders who (sometimes unwisely) attempt to pick tops and bottoms or attempt to predict market reversal points. Trend-following will never get you in at the beginning of a market move, but it does ensure that the market will already be moving in the desired direction before you invest your trading capital.
The goal of the successful trend-follower is to profit from the primary thrust of every sustained long-term trend movement. If such traders can keep the losses on their losing trades small, they can still enjoy worthwhile profits over time.
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