Bottom Picking Vs Momentum Investing

There are two major ways to trade the stock market, bottom picking and momentum investing. Most people attempt to make money by calling the tops and bottoms, but it can be more profitable to simply ride a trend until it ends. nnTrading with the trend has 3 major advantages.nn1. Hard To Pick Tops and BottomsnnAnyone who thinks they accurately pick the tops and bottoms of a stock has never actually traded in the stock market. Of course if you keep trying to call bottoms you are going to eventually be right, but that doesn’t mean that it is going to be very nprofitable.nnPicking the exact spot that a stock will turn around is like standing on a train track saying this is where the train will stop. If it does you feel pretty good, and you make the news. But if it doesn’t it’s going to hurt.nn2. Faster ReturnsnnEven if you manage to pick a bottom it will almost never make a V bottom and start going up. It could take weeks, months or years of a stock going sideways before it actually does go up. That is a lot of missed opportunity you’re racking up by holding onto it.nnOn the other hand if a stock is trending up and you buy it, you are almost certainly going to see some results fast because it is already in a trend. It isn’t uncommon to buy an up trending stock and have it increase 20% or more in a month, but it is uncommon to buy a down trending stock and have it do that. nn3. You Know When Your WrongnnWe are all wrong here and there. The only difference is you know if you are wrong faster when you pick an up trending stock then you would if you pick a down trending stock. nnIf you pick a stock that is going up and it stops or starts ngoing down you know that it is time to get out of that trade. nOn the other hand if you pick a stock that is going down and it still goes down it just looks like it is a better buy. So you might not know your wrong until the stock has already made a huge negative move.nnFor more on momentum investing visit http://www.stocks-simplified.com/Momentum_Investing.html nnFor some stock tips visit http://www.stocks-simplified.com/stock_tips.htmln