| Top Advantages Of Momentum Investing |
 |
 |
 |
| Written by Shaun Rosenberg |
| Wednesday, 07 July 2010 14:47 |
|
Momentum investing is an interesting strategy. It involves buying a stock that is trending up, simply because the stock is trending up.
Momentum investing is an interesting strategy. It involves buying a stock that is trending up, simply because the stock is trending up. A trend trader will then hold onto the position until it starts to turn around. Once it does start to turn around however, a trend trader will exit out of the position. It is a nice and simple strategy that can be pretty profitable if done correctly. But so many people are willing to write it off and consider it a bad strategy that will get you into a stock at the top right before the market crashes and you lose all of your money. The only thing I can say to this is, how do you know where the top is? I have seen stocks or ETFs that were already inflated double in price in just a few months. There is simply no way of telling when a stock will stop trending up, so by calling tops and moving on you are really missing out on good opportunities to make money. Here are a few reasons why trend trading can be so successful. 1. Not Speculative Trend traders are not really speculating or assuming something big will happen in the market that will push this stock higher. If the stock is already going up then it is likely to continue. The only chance that you would be taking is that it is going to continue its trend. 2. It's Simple One other big advantage of trend trading is just how simple it is. If the stock is going up buy it, if it is going down sell it. That's all there is to it. Simplicity really is a great thing. 3. You Don't Need to Understand the Fundamentals One of the stock tips that people will often give is to look at the fundamentals of a company. Look to see how fundamentally strong the company actually is before investing into it. With momentum investing although it can be helpful to know the fundamentals you can still make money without it. As long as the stock iss going up you can make money from it, whether or not you understand it. Heck we don't understand electricity, yet we still take advantage of it. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. For more on momentum investing or other stock market information visit Shaun's site to help you learn about investing into stocks Free reprint avaialable from: Top Advantages Of Momentum Investing. |