Right Side of a Stocks Trend
And yet so many people refuse to trade with the trend for some reason. Maybe they are bottom pickers who cannot imagine the stock market doing anything but go up so they buy when the markets crash, or maybe they are top pickers who want to catch the next big crash. Whatever the reason you trying to trade against the flow of the market can be a bad decision. It can accumulate huge losses, which is bad. Let’s take a look at some examples of where going against the trend was a bad decision. LEH has been trending down since February when it was trading at $65. There were people saying it can’t go any lower when it hit $48. Any bottom pickers would have been disappointed after the stock dropped to $7.7. And that isn’t the only example; Countrywide, Fannie, and Freddie were all examples of how powerful a trending stock is. They could have either work for you or against you. True these are extreme cases but there are always extreme cases in the stock market. Trends aren’t bad things, if you trade with them they can actually be a good thing. Some up trending stocks will double or triple in value in a very short periods of time. It is also important to be trading in the same direction as the market average. When the market as a whole is trending the majority of stocks will tend to move in the same direction. Following the trend of the overall market is one of the best things you can do to put the odds on your favor. And of course it is always good to have as many things in your favor as you possibly can. 
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