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There are several different methods of investing in stocks and trading in stocks. One popular tactic is trend trading of stocks. Many people use this kind of stock trading, for example investors who see trends as beneficial sources of profit.

The trader should select one stock or a group of several stocks to focus on, just like he would with any other investment strategy. Factors to take into account include market movement and trading volume. After the trader selects a stock, he should analyze its price movements. To qualify as a trending stock, it must be moving in one direction continuously over a set period of time. This depends on the period of time. Short term trend traders can use days or weeks, but for long term trend trading, months or years are better.

When trend trading, the movement of a stock's price should show a momentum in one direction. This direction may be up or down, but either way it needs to be a continuous, consecutive movement. When you trade with this method, you expect that the price of a stock will go up in the next few days because it has gone up in the last few days. Or if it is trending downwards, you expect it to continue going down with that momentum.

After the trend in a particular stock is identified, you can purchase the stock at the current price and hold it for the duration of the trend. When the upward or downward trend reverses direction, the stock should be sold without much delay. You should not continue to keep the stock even after the reversal there is a risk of not realizing the notional profits, not to mention the chances of actually incurring losses.

Time frame is another important principle in trend trading. For example, if you bought a stock that was trending up on a monthly basis, you should only check its monthly closing prices. If the fall in price is within a month it should be ignored. The price may fluctuate weekly but you should stick to the monthly trend. If you bought a stock that was trending up over the previous weeks, only the weekly closing price should be monitored. There is no need to bother about the daily ups and downs.

Trend trading isn't just for short term traders. If you are investing in stocks for longer amounts of time, even months or years, you too can use this method of stock trading to your advantage. Short term or long term traders alike can benefit. However, this form of trading requires you to monitor the market continually if you want to see results. If you are the sort of person who buys a stock and then forgets it because of other occupations, this kind of trading is not for you.