Trend following is a strategy in which a trader buys a stock after it has increased in price, then sells it when it falls in value.
Trend followers believe that markets tend to go up over time because of the ebb and flow of the business cycle.
Yet, most of the time, trend followers are losing money. They win only during the times when the market is trending.
Trend followers try to anticipate the beginning of a price movement because prices tend to continue in the same direction.
But, the reality is that the price movement is driven by a myriad of factors.
Some people devote their entire lives to the study of trend-following strategies. They believe it works, but they can't prove it.
This is pretty much the same as how we approach life.
We are always on the lookout for trends, but they are rarely helpful without analyzing the underlying causes.
We follow what famous people do, and we do it because we like to be like them, not because we have any idea how what they have done in their life will benefit us.
Some people say that the secret of success is following other successful people.
While it is true that other people's success may have lessons to teach us, we can't just follow other people's habits blindly.
Most of the time, we're only looking at the outward appearance, the trappings of their life—their lifestyle. They may not benefit us in any way at all.
We always have to be aware of the underlying causes and the necessary conditions that lead to success.
There are many reasons why someone becomes successful.
The most obvious are talent, hard work, skills, training, etc.
But we also need the right attitude and mindset.
We also need to have a dream and a desire to succeed at all costs.
Therefore, let us be inspired by the success of others, but let us think about them critically.
If we want to become successful, we must know what it requires and do what it takes.
If we are not thinking consciously about what is helpful to us at the moment, we will never be able to achieve our goals in life.
We shouldn't follow everyone blindly.
We shouldn't just follow the trends blindly.
We should have the wisdom to know which trend to follow and when.
We must be very clear about what we want and be ready to do the necessary work to achieve our goals in life.