How do I make money in trading? I seek to profit from market trends. I am a short term trend trader. I seek to be long or short a stock or ETF that is in a trend and has the potential to trend for several days or weeks. I will trade anything that is in a strong trend. I will go long momentum stocks as they break out to new highs on blow out earnings. I will go long leading stocks as they break above key moving averages like the 50 day or will short past leaders if they lose the 50 day or 200 day. While other traders think they are getting a great deal on a stock that has had its price collapse into a death spiral I will short it and see if it plunges further. I do not try to catch falling knives I short them. When everyone thinks a stock is way to expensive as it breaks to all time highs I will buy it, when others are looking to buy a stock at 52 week lows I am looking to short it. I do not care if the bull market is in gold, silver, oil, or iPads I will go long.
I do not attempt to make money through predictions, fundamental valuations, or gambling. I seek to make money because markets tend to move in trends and I plan to find the best trends and ride them until they end. If price is the truth then moving averages are the lie detector. I will identify and trade trends using the 5 day ema, 10 day sma, 50 day sma and 200 day sma. I do not choose when to enter and exit a trade the moving averages tell me.
Below is a chart from the time period I went long Apple on the break above the 50 day, I stayed in and held this entire time period when price was above the 5 day ema I was on the sidelines when the price closed beneath the 5 day ema but re-entered as price closed again above the 5 day ema. I did not hold through earnings but was still able to pull 100 points out of Apple twice. This is one of my big winning trend trades I have had this year. Others were being long and then short Priceline, short Groupon, short JP Morgan after the bad trade announcement, and now I am short facebook. There is always a trend some where in the stock market and I intend to find it and trade it.