Growth stocks are probably the best trend producers there are. To judge this question it is important to be clear about hindsight and anticipation. In hindsight you will always find a better trend with a better story and better profit opportunities. The trading problem is how to do it before the matter of fact.
The reason for growth stocks to be the best source for trend chances is the inertia of company growth. This is true at least for growth companies with the right product. Look at their earnings or revenues lines in a fundamental chart and become aware of the magic of twenty up-quarters in a row. That’s a chance of one in a million. So, there must be some meaning in trends, despite all blah blah from the ivory towers of efficient market theorists.
Still, it is not easy to trend trade, even with carefully selected growth stocks. A trend is something that gets fueled all the way up, or down, which means that all the time the real potential gets underestimated. On top of that, the market estimation mood jitters and that’s why we have tremendous price fluctuations overlaid on our fine growth trend.
There are a number of answers to this problem. One of it is timing the right entry point, which allows the trader to use a tight stop. Having a stop and trend trading fits together like a hen an its egg. If the trend is still marching on, your stop didn’t get executed, or otherwise the trend may have come to an end.
Timing the entry may sound good, but has a severe drawback. You have to wait until your entry signal occurs. Waiting is poison for trend traders. And here we are stumbling on the solution, at least the one for this article. Day trading. The day trader can try every day to get in. That is the beauty for growth investors. Without having to wait for a trend entry they could actively approach the problem day by day.
One fine idea is to virtually trade the stock index and in reality enter a position in your growth stocks. There must be some additional rules, like individual stops, in case one of the bought stock drops like a stone, but generally the stop technique and execution should be accomplished by the day trading system.
So, this method is obviously not for the beach trader, but the combination of day trading and entering of long running growth trends can be very lucrative.
Sadly there is another minor problem. Day trading is not easy and learning it by a book seems to be impossible for most aspirants. At first you need a good blueprint for how to day trade, but then it is hugely helpful to watch over the shoulders of someone who is actually able to execute this day trading system, for instance in this trading room.
