Stockbee: Stocks trend from time to time

2/04/2014

Stocks trend from time to time

CSIQ had a big trend move in last 13 or so month. Obviously if you can catch a move like that you can have big returns.

These kinds of trends have fascinated speculators for hundreds of years and methods have evolved to try and capture these kind of moves.

Trend following is something you will come across as one of the legit method of position trading. For some it is almost like religion.

As a speculator if you look at both good and bad side of trend following then you are in a better position to make informed decision.

The nature of moves in individual stocks consists of long duration trends from time to time. Trending period is a period where the stock drifts up or down for a given time frame. During trend periods stock make series of high for that trend duration.

Not every stock trends like CSIQ during a year.A stock may not trend for years. When you see a long duration trend it looks so simple. But you have to understand you are looking at a trend after the fact.

At the start of every trend move you have no way of knowing how long it will last in period terms . You do not also know how much % move it will make. Unless there is some other superimposition you make like say valuation or growth or future potential predicting trend length in a stock is difficult but not impossible.

In an index based on past trends you know approximate behavior of trends but still every trend move in market is different as most of us found out in last 14 months where market went up without a 5% correction.

As a speculator we are interested in trends not from theory perspective but from the money making perspective.

As a trader I am agnostic to a style as long as it can make me money with least amount of drawdown.

Now let us look at CSIQ again to better understand trends: