Stock day traders who act in sync — no matter the stock, or whether they are buying or selling — makemore money at the end of the day than their out-of-sync peers, reports an analysis to appear in the Proceedings of the National Academy of Sciences.
Making its rounds on the trading twitter circuit was an interesting article about how intraday traders make more money if they follow the trend.
“I love the counterintuitive nature of the finding,” says complex-networks expert Albert-László Barabási of Northeastern University in Boston. “The dogma is that the successful investors are the Buffets — those who swim against the current. Yet this study shows that when it comes to day trading, going with the wave has real benefits.”
The angriest I have ever gotten at a trader was the one who constantly fought the trend- he faded everything. Great trading skills, very bright, loved the markets, but just had to fade everything. A few thoughts on fading. 1) If you learn which stocks not to fade you can do very well fading stocks as an intraday trader. 2) It is easiest to learn by just following the trend and building your skills trading.3) There are some personalities that are better suited to fading everything. 4) Do you fade because you would rather show you are smarter than everyone in the market and not more interested in making money? If this is the case I have a few phone numbers for you. 5) Fading is the best strategy in a range bound market. We are in a trending market and have been since August of 07 so any study will show this system works best during the past four years. This will not always be true.
4 Comments on “Follow the Trend?”
Hi,,,
The financial website caters to the high brow professionals who go deep into day-to-day markets with stocks and mutual fund investments. The site gives the individual investor a range of tools.
could you link to the article?
I feel this is missing something. Think about this:
Anything that always continues can not stop (reverse)
Anything that always reverses can not move
The market both continues and reverses, to continue and to reverse constitutes only 2 conditions: true or false. To imagine fading or trend following is in my mind, misguided.
Mark, here is the link to the article he is referring to:
http://sciencenews.org/view/generic/id/71196/title/Jumping_on_the_bandwagon_brings_rewards
Michael W