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Top Advantages Of Momentum Investing

By Shaun Rosenberg

Momentum investing involves buying stocks that are trending up and assuming that the stock will continue to go up. It is an interesting and simple strategy.

Trend traders will hold onto the position, just until it starts to turn around or stops going up. Once it does it is time to get out of it.

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 some reasons that trend trading can be a powerful strategy.

1. Not Speculative

You don’t have to speculate when trend trading. If a stock is going up then it is going up. You don’t need to speculate that it will turn around or that something big will happen to the company. Instead you are just assuming that it will likely continue it’s trend.

2. The Strategy is Simple

One other nice advantage of trend trading is that it is very simple. If a stock is going up, but it. If it is going down sell it.

There is no need to make things too complicated.

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.

For more on momentum investing or other stock market information visit Shaun’s site about the stock market basics

Article kindly provided by UberArticles.com

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Article Citation
MLA Style Citation:
Rosenberg, Shaun "Top Advantages Of Momentum Investing." Top Advantages Of Momentum Investing. 6 Jul. 2010. uberarticles.com. 3 Aug 2014 <http://uberarticles.com/finance/stocks-mutual-funds/top-advantages-of-momentum-investing/>.

APA Style Citation:
Rosenberg, S (2010, July 6). Top Advantages Of Momentum Investing. Retrieved August 3, 2014, from http://uberarticles.com/finance/stocks-mutual-funds/top-advantages-of-momentum-investing/

Chicago Style Citation:
Rosenberg, Shaun "Top Advantages Of Momentum Investing" uberarticles.com. http://uberarticles.com/finance/stocks-mutual-funds/top-advantages-of-momentum-investing/


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