Trend-following Strategy

One of the most frequently used trading strategies is the so-called trend-following strategy which is not only used in the field of Binary Options. What the trend following strategy involves can be even guessed by traders who have not dealt with the strategy yet: The trend following strategy includes in essence that the trader follows a trend and a certain development with his actions. This strategy is also supported by numerous well-known stock market wisdoms such as "The trend is your friend". The trend-following strategy follows the assumption that there is mostly a wide audience of investors and traders who are trading derivatives and other financial products which are speculating on either falling or rising rates. The trader follows this "mass" and does not trade against the behavior of most of the other traders.

Good chances of success with the trend-following strategy

The trend-following strategy is very popular because it could be very often prove to be successful in the past. The trend-following strategy is very effective and therefore used by many investors and traders. The biggest problem is to recognize when a trend has emerged and to identify the optimal purchase and/or sale date as possible. Therefore a trader must "foresee" when a trend has started, how long it will continue and when the trend is over. This is not always easy in practice. So can you speak of a trend if the price of a stock has risen three days in a row? Or does a trend start only after the rates have risen a week in a row? Due to these problems the chartists determine it mostly at certain price brands when a trend begins and how it might evolve.


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