ISA Trend Investing

ISA Trend Investing

ISA Trend Investing is an innovative investment strategy, which utilises various economic and financial tools to enable the investor to realise greater returns. The strategy integrates theories including: Market trends, efficient market hypothesis, and behavioural investing, along with popular investing tools including technical analysis, and then combines this all together within a modern investment vehicle.
ISA Trend Investing differs from other investment strategies by firstly not being a purist strategy, that is, not simply being a strategy on momentum or trend investing, based on fundamental investing, or solely based on the use of technical analysis. In essence, ISA Trend Investing takes the key lessons learned from each of these successful investing strategies and combines them into a modern investing strategy. Further to this, the strategy then adds an extra dimension by incorporating a tax-free financial vehicle. ISA Trend Investing also differs from other strategies due to a key educational tool it incoporates, this is known as shadow investing.
The key consideration within ISA Trend Investing is an economic concept known as Market Trends. These trends can be split into three main trends, these are: the secular market trend, which lasts 5 - 25 years; the secondary market trend, which are short term price changes; and the primary market trend, which lasts a year or more. These trends draw a picture to the investor of the market sentiment, which can be calculated as the change in the value of a market index multiplied by the aggregate trading volume occurring within the index components. Market Sentiment is the general attitude of investors in regard to a particular investment. If the consensus is positive, market sentiment is said to be bullish, if negative, market sentiment is said to be bearish. Gauging the market sentiment on various levels of time e.g. daily, weekly, monthly, enables the investor to trade with the trend.
In regards to the key tools for ISA Trend Investing, ISA Trend Investing utilises Technical Analysis as one of the tools for identifying the trend and sentiment of the markets. However this strategy differs from a purely technical perspective, as mentioned above. ISA Trend Investing also combines fundamental analysis with technical analysis; to not only look at past performance, but also make financial forecasts. This innovative perspective enables the investor to get a complete view of the market and the securities being investigated.
Below are 7 unique points of the ISA Trend Investing Strategy:
1. Instead of simply buying and holding, the investor is active. By understanding the overall trend or direction of the market, the investor has the clarity and knowledge to be able to invest when the market is trending up, and switch out of the market when the confirmation of the trend is down.
2. The investor utilises a “Stocks and Shares ISA” instead of a Cash ISA.
3. When the trend is confirmed up, the investor investigates the highest quality Investment Funds. ISA Trend Investors search for funds that can be purchased within a Stocks and Shares ISA. However, they don’t buy individual stocks as they carry too much risk. Nor do they buy index tracker funds because it’s possible to “beat” the indexes if you know what you are doing. ISA Trend Investors buy their fund or funds only when the market is healthy (uptrend). When the market is unhealthy (downtrend), they remain in a cash-based fund.
4. When the market is healthy investors time their their puchase of the selected funds. They only buy their fund or funds at the time where there is the highest probability of success. To do this, investors use technical analysis or charts.
5. ISA Trend Investors time their exits. When the market’s trend is in a confirmed downturn, instead of selling and cashing in their ISA, they quickly switch. This helps investors to move out of the downtrend so that they are completely out of the market. This means your cash is now placed or “parked” in a Stocks and Shares cash-based fund. You do this as soon as the market confirms its downtrend, meaning the market is now unhealthy and unsafe to invest. This helps investors to bank profits and protect and preserve their capital whilst the market is falling.
6. Because ISA Trend Investors can read the trend of the market, and pick the highest quality investment funds, it allows them to set themselves aggressive performance targets. Their aim is to beat the powerful US Nasdaq Composite (The Nasdaq is capable of 24.5% annual returns over the long-term.
7. You don’t use an adviser. You become your own adviser and make your trades on a “smart” investing platform with virtually zero costs. By being your own adviser, you save on charges, commissions and initial set up fees. This seriously helps boost your overall compounded returns. And if you know what you are doing, you get much better results than you would if you were with an adviser.
For further information regarding ISA Trend Investing, see the reference list below.

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