There are two types of investors really. There are those that like to buy stocks as they are trending, hoping to ride the wave of profits. They will look for any sign of strength, or trend and then, with their own set of criteria, find their way into this trend and hold on. Then there are the counter trend traders that are always looking for a discount. Their criteria are that a stock be trending lower, out of favor if you will. Their goal is to enter at a discount and ride the wave of trend traders that buy in as the stock gets stronger. So which is better and which should you focus on?

Truth be told it's not up to you. I have spent over a decade working with people of all backgrounds and personalities. What I have found is that you naturally gravitate towards one or the other. It doesn't matter if you are day trading and you buy 2 minute uptrends, or you are a long term investor and you are looking for the dogs of the Dow. In either case you naturally move one way or the other.

There are may studies that show one approach is better than the other, and then there are studies that prove the opposite. Here's the thing. Trend trading is easier, and counter trend trading is an art form.

Trend trading is the first thing that is taught to new investors as it is the fastest way to get them into the market, and it is what everyone already knows. Follow the trend to the promise land. If you are new at investing or trading then this is where you start. You may find that it feels odd to you and you don't like it in which case you may just naturally be a counter trend trader. If this is the case, then I have some bad news for you.

Counter trend trading is extremely hard to teach. It is like docking a large boat with a strong moving tide. You can teach someone on paper how to do it but there is no way they get it right the first time...Or the second or third. Each trader has to find their "moment" to enter a counter trend trade and only then can you learn what works and what doesn't. This takes time, and money as you will likely lose while you learn the art. Here's hoping you find that you are a trend trader!