All trading methods come down to one very simple basic thing: we are all in search of capturing the trend correctly.
- Long term trend followers are trying to be right about the long term trends using mechanical systems.
- Buy and hold investors are trying to be right about the stock market indexes and mutual funds, being in a long term trend over their lifetime.
- Value investors believe that underpriced stocks will reverse and trend higher over the long term based on the cheap price they are getting.
- Day traders are trying to capture the trend that happens in one day’s time frame.
- Swing traders bet that the trend reverses off support or resistance levels and give up a profit.
- CanSlim traders are trading the trend of a hot growth stock out of a base price range, or cup with handle pattern
- Bears are betting that the trend reverses and something goes down in value, and they make money.
- Call buyers are trying to capture an uptrend, call sellers want to profit from a downtrend.
- Put buyers are trying to capture a down trend, put buyers want to profit from an up trend.
- Traders buying long option strangles are betting on a trend either way bigger than what is priced in, Strangle sellers are betting the trend will be less than what is priced in.
All trading methods are simply an effort at trend identification and capturing profits by entering at a high probability moment and exiting with profits in place. Being on the right side of the trend in your time frame is what a successful trading method is all about.