How many people do you know that lost money in the dot com bubble? How about the real estate and credit bom and burst?

Maybe you lost money in these markets as well.

My question is simple; why did people lose money in these markets when the growth was so enourmous?

The answer; markets don’t go up forever. Of course when times are good it is easy to get sucked into the false hype that markets go on forever.

The reality is much different.A quick study of history should make this very clear. Over the past 110 years (since 1900) there have been five bear markets, one of which we are currently in. Those five bear markets lasted on average 12.4 years. That means out of the past 110 years 62 of them have been spent in a losing market environment.

So have there only been losers during these bear market times? No. There are winners. I want to talk to you about those winners in this article. I want to talk to you about trend followers.

Trend followers are the winners during bear markets and during bull markets. The mutual fund managers are not the winners. Sure they win big on commissions, but not on results. If you have mutual funds you should sell them all.

What is trend following? It is active trading, but probably not the kind of trading that you are thinking of. It’s not day trading. It doesn’t take you 8 hours a day to do.

Trend following is reacting to the price action in a market by using a systematic approach to the market that you are following. As a trend follower you are not concerned with predicting which way the market is going to go. Your only objective is to catch the trend. If the trend is up you buy. If the trend is down you sell. Simple, right?

Well let me inteject my ramblings on trend following and let you know that trend following is not the Holy Grail. It is also not something that was just thought up last night during a late night trading session. Trend following has been around for a long time and some of the most profitable investors and traders over the last 100 years have been trend followers.

Trend following systems include strict money management and clearly defined rules. As a trend trader you know exactly how much you are willing to risk on every position before you ever enter the market. You also know how big of a position you will take and exactly how you are going to exit the market.

Here is what I love about trend following; there is no guess work involved. Trend following allows you to enter the market with these following questions already answered.

1. How do I get into the market.

2. How many lots, contracts or shares should I trade.

3. What is the amount of money that I am risking.

4. Where is my stop loss (where I exit if the trade goes against me).

5. Where do I take profits (Where do I exit if the trade goes in my favor).

Does your trading or investing strategy involve this kind of attention to detail? Does your financial advisor pay this kind of attention to detail?

If not you should consider a trend following strategy like Advent Forex and a trend following mentor like me. No matter which way the market goes you should be positioned to make money. That is exactly what becoming a trend follower allows you to do.

It doesn’t mean that you will never have a loss. You will still have losses, but on average Trend Following strategies usually have wins that far surpass the losses. The reason being, that when a trend starts it does not easily change. So, while your losses may be small when you do lose, your wins can run on for a long time. This results in big returns on your investment.

Stay tuned to our f.r.e.e. trading blog for more insight into trend following.

To your trading success,

Cecil Robles

Ethos Traders Inc.

Strategic Advice For Trading More Profitably

www.adventforecourse.com

1-866-200-1102