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Predictive Investment Strategy or Trend Following Strategy – which delivers better ROI?

Investing in the market often means choosing between a predictive and trend following strategy, without any help from a magic spells that allow you a glimpse at future stock prices. As a beginner,it is also likely that you have limited information to pick which strategy to use and need to get the choice right to protect your investments. To help you make the right choice, we delve into the benefits of these two strategies and how they can be used to maximize returns on your investment.

  • The predictive investment strategy and its reliance on data
  • Trend following and buying stocks on the rise
  • Buying and selling prices are what you need to worry about
  • Benefits of predictive and trend investment strategies
  • How to make your choice between the investment strategies

What is a Predictive Investment Strategy?

Foreseeing the trajectory of the market in the future or just a few months down the road irrespective of conditions right now and investing accordingly to take advantage of it, is what constitutes predictive investing. Often based off predictive analytics which in turn functions with the aid of big data this investment strategy is gaining popularity.

What is the Trend Following Strategy?

Buying when the market is going up or when certain shares are on the rise constitutes the trend following strategy which is based on “positive movement”. Here you are following positive momentum of the market, and hoping to benefit from making investments in stocks that are performing well and are likely to go up further.

Buying and Selling Prices

As an investor the prices that you are immediately aware off are the buying and selling price of stocks. Small fluctuations that happen over months or days in the prices of stocks are often missed by investors as they focus on the final price that they receive when they sell their stocks.So whether you opt for a predictive or trend strategy these two prices should form the basis of your investment.

Benefits of Predictive Investing

Using predictive strategies to find how the market will do in the future is not fail proof. However, it is being increasingly used because of the emergence of big data, which allows investors and fund managers access to analytics based of data that is gathered as soon as it is generated. When a fund manager or investor takes predictive strategies and analytics into account they can make changes to investments faster without waiting for sales figures to show a drop in a quarterly report.

Benefits of Trend Investing

Investors are skittish about putting money down in stocks when the market falls and therein lays the attraction of the trend strategy. As a result the trend investment strategy is ruled by changes in stock prices that occur over a period of 50 to 100 days and people buy as the prices are going up. People who indulge in trend trading are therefore able to take advantage of trends and generate a profit within a short period, instead of waiting for years.

Using a predictive or trend based investment strategy can result in the same amount of returns on investments and as a result choosing between the two can be difficult. In a bullish market which shows no signs of a downturn, trend investment strategies allow you to take full advantage of it and get the most gains.