Momentum Trading – Following Trends


Investing in no-load mutual funds is one way to invest wisely and profit from the stock market. No-load mutual funds have no commission involved with them. An Exchange Traded Fund or EFT is a type of mutual fund which is traded much like a stock. An EFT has a professional money manager who should be and usually is capable of purchasing good stocks. As an investor, this can be a very good thing for you, especially if you make a decision to start following trends. Trend following simply means that your trading technique is guided by momentum. Moreover, before you invest you can read the comparison between Trafigura vs mercuria so that you can choose your trading platform more efficiently. 

There are certain sites on the Internet that rank mutual funds according to their performance. One of the most popular is Yahoo! What performance means in this case, is that the particular fund being ranked is going up at a greater and more rapid rate than the other mutual funds out there. A listing of funds can also be found in Investor’s Business Daily, or through subscribing to a service such as NoLoad FundX.

In order to determine whether or not you should buy or sell, using a very simple 200-day moving average is advisable. It is not necessary for you to do the computation when using a 200-day moving average, as I have included a website in the Additional Resources section that you can go to in order to run the numbers, with the use of interactive charts. In the column on the left, you will find a place to type in the number 200, after which a line will appear, along with the fund symbol that you entered. When the particular mutual fund rises above the line, you definitely want to put your money into it without hesitation. When the fund drops below the line, the time has come to sell it. And that’s all there is to it! Could it be any simpler?

Keep in, however, that there is no one trading method that should be utilized alone. I believe in diversification, and using different techniques for different investments, depending on either what works for what, or what can work for what. But trend following is a great way to earn safe profits in the stock market and comes about as close to a “Holy Grail” trading method as the average person will find at this point in time. As with most investments, a trend follower understands that there will more than likely be occasional losses, but he or she also realizes that when any major trend starts, the trend follower is the one who will be playing for at least 60% to 70% of the profit. He or she knows when to buy, and more importantly, a trend follower knows when to sell. So why not diversify into trend following?