Stock Trend Investing

Both long-term investors and traders like to know what the historical performance is of a trend indicator. Find out here what profit/loss ratio and what percentage of successful trades you can expect when you use a proven long-term trend signal.

Before going to the data, let’s answer first some fundamental questions. Why would we look at historical investment results at all? Everybody knows that history does not offer a guarantee for future performance. Still, I think it is wise to study the past. History does not always repeat itself, but often it does. And often is good enough for me.

Probability Game

The usual opinion is that those who want to start trading the financial markets better start trading on paper first. I disagree, but only when certain conditions are met.

Paper trading is pretending that you are trading. You make decisions on what you want to trade, when you buy it and when you sell it. You keep a record in real time of the profits and losses you make with these fictive trades. There are lots of tools out there that make it easy for you to do this.

However, what good does it do you?

Wrong Emotions

Here are two good reasons why trading paper is a waste of time in my opinion.

Even when you invest in shares that are listed on your domestic stock exchange, you may run a foreign exchange currency risk. Further below, you find the three choices that you have when you decide how to face this situation.

First let me describe the problem.

The share price of a company is a reflection of its financial results and growth potential. And this price is nominated in a certain currency. Now what happens when a company generates a major part of its costs or revenues in a foreign currency?

Two Foreign Exchange Impact Examples