Stock Market Trading Strategy: Trend-Following with Risk Management A robust stock market trading strategy combines trend-following principles with disciplined risk management to maximize returns while minimizing losses. This approach suits both novice and seasoned traders. **1. Identify the Trend**: Use technical analysis tools like moving averages (e.g., 50-day and 200-day) to determine the stock’s direction. A stock trading above its 50-day moving average signals an uptrend, while trading below indicates a downtrend. Confirm trends with indicators like the Relative Strength Index (RSI) to gauge momentum—RSI above 70 suggests overbought conditions, below 30 indicates oversold. **2. Entry Points**: Enter trades in the direction of the trend. For an uptrend, buy on pullbacks to the 50-day moving average or support levels, ensuring the stock shows signs of resuming upward momentum (e.g., bullish candlestick patterns). Avoid chasing overextended moves—wait for confirmation. **3. Risk Management**: Never risk more than 1-2% of your portfolio on a single trade. Set stop-loss orders below key support levels to limit losses. For example, if you buy at $100 with a stop-loss at $95, your risk is $5 per share. Position size accordingly to stay within your risk tolerance. **4. Profit Taking**: Use trailing stops or target resistance levels to lock in gains. Alternatively, scale out of positions by selling portions as the stock rises. **5. Review and Adapt**: Regularly analyze trade outcomes to refine your strategy. Stay informed on market news and economic events via platforms like X to anticipate volatility. This strategy thrives on discipline, clear rules, and continuous learning, ensuring long-term success in the stock market. #ExpertReview