Identifying Market Trends: Jump in Before the Masses do
A new trend can begin that is based on fake news or false data to create the illusion all is well. Remember that the truth or lies are just a matter of perception. One person will swear that he is telling the truth, while another will swear that he is lying. From an observer’s perspective, both are correct.
They are convinced of their position, so all you will do is waste your time and energy trying to sway them. Instead, you are better of letting them battle it out, while you sit down and take a look at the real events that are unfolding, most of which the masses are oblivious too. The main principle of trend investing is not to focus on the noise factor but to pay attention to the “reality factor”. In other words, trend investing focuses on what is going on minus the morality or judgemental angle.
The observer’s perspective to Identifying Market Trends
Personal views are on par with toilet paper regarding their relevance in determining trends. Oh, by the way, we also include ourselves into the equation. This is why we do not voice our personal opinions as nothing will change, and if we let our personal opinions cloud our judgement, then the ability to look at the situation objectively is lost.
Over time it gets easier and easier to do this, and then one day you wake up, and it is almost like breathing. Practice makes perfect, and there is no better time to start than today for tomorrow never comes. Today is the tomorrow you dreamed of starting something new yesterday but never did and most likely never will. If you want to spot new trends you can’t allow your emotions to do the talking; once you emotions talk, logic goes out the window and stupidity
Keep Your Emotion in Check when Identifying Market Trends
In order to spot new trends one should not allow one’s emotions to do the talking; once your emotions take over, your logic goes out the window and stupidity is in charge of the situation. This is the first principle you need to muster before you can develop the ability to spot new trends.
A Trend in Motion Is unstoppable
Whether you and I agree with it or whether it is morally right or wrong is irrelevant. Nothing can stop a trend in motion. This bull market is a perfect example of fake news driving a new trend; all the data imaginable has been manipulated to create the illusion that the economy is doing well. If we had allowed our personal opinions to dictate the way we trade, then like all the fools out there we would have missed the biggest bull run of all time.
Trend investing provides you with the opportunity to see the real picture as opposed to the one the mass media forces you to focus on. The idea is to sell when the masses are dancing and buy when they are nervous.
The trend is your Friend
Trend investing states that the trend is your friend, everything else is your foe. Mass Psychology clearly states that the crowds always oppose the trend and as a result, they are always on the losing end of a trade.
Posted courtesy of the Tactical Investor