Making Money In Stock Trends - Why Would You Make a Stock Trend Analysis?

Making Money In Stock Trends

Making Money In Stock Trends

Why would you make a stock trend analysis? The ultimate goal is of course to make some money. Nobody or very few people only are spending time investing their money in the stock market just for fun. The objective is of course to make money. The exception here is maybe those people who analyze trends as a profession for their employer. They get paid to do the work. But I guess when they see some good trends; they put their own money behind them as well.

So, next question then. Why would making a trend analysis help you to make money on the stock market? The answer is simple; to predict the future. But nobody can predict the future you would say. Correct, neither with crystal ball gazing nor with performing stock trend analysis can you predict the future with certainty.

The idea here with Stock Trend Analysis is that you make a prediction for the future and that you have a higher probability to be right than to be wrong, on average. You can never say for each individual situation what the outcome will be. But the principle idea behind making a trend analysis is that you can be more often right than wrong.

Thus being wrong on a regular basis is inherent to doing a stock trend analysis and making based on these predictions for the future. People who are making predictions based on this analysis or investors who are putting their money behind these trends have to accept that they cannot always be right, that they cannot always win. If they lose sometimes or if they are wrong sometimes, they shall not be discouraged. Success here can only be measured in the long run. Making Money In Stock Trends

Now let's go to the next point in this explanation why someone would be making a stock trend analysis. If this is done to predict the future and to make money eventually, why would you trust that something like this works? Now we could list here all the books and articles that have been written about the successes that investors have had with trend investing by following stock trends. That goes beyond the scope of this article.

We want however to point out a simple visual check that you can do right now yourself. Have a look at a historical chart of a stock market index that shows a time span of more than a decade. It is easy to see the trends up and down. It is also easy to see that these trends lasted for many months and often many years. It is then common sense that when stock trend analysis can identify a trend rather early in its existence, and the prediction is more often right than wrong, good money can be made by riding the wave of the trend.

In summary, investors make and rely on stock trend analysis to earn good money in the stock markets by being more often right than wrong when predicting the future based on existing trends in the market. Making Money In Stock Trends

Making Money In Stock Trends - Why Would You Make a Stock Trend Analysis?

By: Trading Expert

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