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How to start with Trend Trading

By Edited Nov 13, 2013 0 0

Have you been lucky or have you been good with making money in the stock market? If your experiences so far are not that great, it is maybe time to change strategy. Have you followed a systematic and proven system so far? If so, you need to change system if you want to get better results. If you haven't used a systematic approach, that is the first thing to change. Trend Trading, also called Trend Investing, is a promising option then. In this article we will look at how to start with Trend Trading.

Things You Will Need

- Internet access
- One hour per month (depending on the system you chose)
- Common sense
- 1,000 dollar or more, that you do not need the coming 5 years

Step 1

Trend Trading for Superior Returns
To start, you need to define what type of investor you want to be and what your limitation and restrictions are. Important questions to answer for your self are:

- How much time each month do I want to spend on my stock market investments?
- How often during a month do I want to spend time on my stock market investments?
- How much of the capital that I have earmarked for my investments am I prepared to lose on a trade?

The answers to these questions define what type of trend trading you need to look at. Yes, there are different types od trend trading and to start you need to decide what fits best with you.

We discuss here the two extremes.

1) If you want to spend every day from 1o minutes to several hours on your investments, you need to look at trend trading systems that follow the very short trends that last hours, days or maybe weeks. Search for articles and websites that focus on day trading and short trend trading. There you will find daily instructions and coaching on how to use their systems.

Be aware that systems that make use of the shoter trends, often make use of options and futures and carry therefore a higher risk. Before chosing any trend trading system, familiarize yourself very much with the corresponding risks.

2) If you want to spend only once per month just one hour on your stock market investments, you need to consider a system that capitalizes on longer term trends. These longer terms trends can last 3 to 6 months or sometimes several years.

Some trend trading systems that focus on longer term trends are based on selection on individual stocks. Others are based on index funds and ETFs (Exchange Traded Funds) and Mutual Funds that follow closely major stock market indices. The second trend trading category uses these funds to spread your risk as well over all the different stocks that are part of the funds.

Step 2

Oursource trend trading or doing it in-house
After you have defined what type of trend trading system would suit you best, you need to make a decison if you outsource the management of your investments or keep it in-house.

Thus the decision in this to take is if you want to manage your own investments or if you want to transfer it to an external money manager. Make sure that when you transfer your money to someone, you have checked and re-checked the credibility from that person or institute.

With trend trading and especially capitalizing on longer term trends, it is easy to keep your investments in your own hands and execute your trades via your current broker and using a system like Stock Trend Investing.

Step 3

Example of historic trend trading chart
Select a trend trading system.

There are a lot of trend trading systems out there, so you need to select a system and approach that you feel comfortable with. Do some research to compare what is out there.

One downside of a system that you are not comfortable with is that you risk worrying about your investments. This are your savings that you invest and you need to feel comfortable with how that is done. Your peace of mind is too important.

Note that there are systems out there that cost a few thousand dollars as an upfront fee. There are also membership solutions where you pay a limited monthly fee of less than hundred dollar per month. The membership services have the advantage that they need to keep providing you with value to earn your money every month.

When chosing a membership service, ensure that you have a risk-free trial period of at least a month. If before the end of the trial period, you feel that you do not get sufficient value out of the service, you should be able to get your money back.

Step 4

Start small with trend trading
Start to use the trend trading system with relative small amounts. Get experience and comfortable with the system before you increase the amounts that you invest following that system.

There are different trend trading systems. Select one that fits with what you are looking for.


- The time that you want to spend on it

- The risk you want to take

- If you want to control your investments yourself or outsource them to a money manager

- The fee structure that you would like to pay

- The initial investment amount that you want to start with to get comfortable with the selected system.

Tips & Warnings

You have seen those disclaimers that exist on almost all websites that relate to investing. There are two reasons they are there.

The first reason is that the lawyers tell the owners of the site to put it there to protect themselves.

The second reason is that these warnings should be taken very seriously. Investing in the stock market never gives any guarantees. Historic results are never a guarantee for future results. If you invest in the stock market, you alsways take a risk to lose something. Maybe the risk is not obvious to you initially, but there always is risk. Before you use any system, look at what the risks maybe.

One example of a risk that is very easily overlooked is when people get promised that they get in say 10 years at least all the money back that they have invested now. That is nice and maybe looks as a no-risk investment. However, consider how much interest you could have gained on your bank account for example. By using this money for this other investment that guarantees you to get all back, you lose the interest that you could have gained from your savings account. And over 10 years, that could have added up.

Thus always make sure that you are aware of the risks.



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