5 Reasons Explaining Why Trend Trading Is Much Better Than Buy-and-Hold Investing
Today there are many favored views taken as far as investing techniques are concerned. Most people are acquainted with the traditional method of purchasing a stock and letting it grow before selling it one or two years down the road. But before beginning investing that way, there is a plan that's growing gradually in appreciation. This is the business of trading based mostly on trends often referred to as trend trading. Here are 5 reasons that explain why trend trading is better than buy-and-hold investing.
Better to Learn and Apply the Concept
A backer who is operating from the standpoint of trends has a lot to learn in the sense of trade analysis and the like. There must be a understanding of the market in general and its trends together with those of technical indicators. However the biggest difference between a trend financier and a buy-and-hold is that the things that are learned here can be applied to stocks generally. Even without previous knowledge on the stock in question.
Potential for Bigger Profits
How a buy-and-hold profit works is that an investor buys a stock that presently is at a lower price. If the financier has bought a good stock, the value of the stock rises and the investor makes a good profit out of the greatest difference between the stock's current price and the price it was purchased at. This is all well and good, but the majority notice that stocks move up and down whether or not the overall trend is for either. Trend traders exploit this by selling and purchasing according to the swings and roundabouts. Thus they may be able to profit from the swings and roundabouts as wells as the price of the stock.
The buy and hold philosophy can be employed for any time period in theory, nevertheless it is normally more closely fitted to financiers who are investing long or intermediate term. With trend trading, it is possible to profit whether or not you are trading for the day or the week or the year. It can be applied to a good variety of scenarios and if a trader wants to rest from the market, it is actually possible to do so with your profits already guaranteed[**].
The business of trend trading revolves around watching goal technical signals and using that information in making choices. Unlike the buy and hold philosophy this can be accomplished with very little research on particular stocks. By watching the trend, a trend trader is able to make judgements concerning their stocks and it's extremely hard to enter transactions on a bet this way.
Trend Trading is About the Financier
Trend trading depends more on the financier and the amount of talent that individual has. When trading on a buy-and-hold just about the only possible way to profit is by hoping the stock will go up. With a trend trader it isn't so much about the stock going up. It is about how well the investor can determine if a trend is changing. Once the stock indicates that the trend is changing, the market trend investor will leave the transaction and find another.
The buy-and-hold technique of investing has played a very important role in the development of the stock exchange we see today. Having 1 or 2 stocks that are doing well and hanging on to them could easily end money concerns. However in the world as it is now, such an investment plan is getting more impractical. You have read 5 reasons explaining why trend trading beats buy-and-hold investing. Before becoming concerned in the stock market give heavy consideration to trend trading.
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