Table of Contents
Key Takeaways
- Trend following helps beginners simplify trading by focusing on clear market directions instead of predictions.
- Simple tools like moving averages, trading platforms, and stock screeners make it easy to apply trend-following strategies.
- Risk management and discipline matter more than perfect timing when using trend-following methods.
- Trend following still involves false signals and losing trades—success comes from sticking with the rules over time.
Following Trends: A Beginner’s Gateway to Trading Success
For beginners, trading can feel overwhelming—charts filled with indicators, fast-moving news, and endless opinions. That’s why trend following has become one of the most beginner-friendly approaches to the market. Instead of trying to predict tops and bottoms, trend following simply means riding the wave when a clear market direction emerges.
If you’re brand new to investing, it also helps to first understand what the stock market is and how it works. With that foundation, trend following becomes much easier to grasp.
The beauty of this method lies in its simplicity: follow the price action, use tools that show momentum, and let the market tell you where to go. In this guide, we’ll break down the essential tools beginners can use to try trend following, from moving averages to stock screeners, so you can start with confidence.
Moving Averages: The Simplest Trend Indicator
One of the most widely used tools for trend following is the moving average (MA). It smooths out price action and helps traders see the broader direction of the market.
Trump’s Tariffs May Spark an AI Gold Rush
While headlines focus on trade wars, our AI has identified one specific $1.5 trillion opportunity that remains completely overlooked. Take the 30-second assessment now to see if your trading profile matches this high-growth play before the opportunity expires.
SEE MY AI ASSESSMENT ➔Why Beginners Love Moving Averages
- Easy to understand: If the price is above the moving average, the trend is generally up; if it’s below, the trend is down.
- Flexible: Works across stocks, ETFs, forex, or even cryptocurrencies.
- Popular: Many platforms (like TradingView or Thinkorswim) offer built-in moving average overlays.
Common Types of Moving Averages
- Simple Moving Average (SMA): Averages the last “n” number of closing prices (e.g., 50-day SMA).
- Exponential Moving Average (EMA): Puts more weight on recent prices, making it more responsive to current moves.
Real-World Example
Many traders use the 50-day and 200-day moving averages. When the 50-day crosses above the 200-day (a “golden cross”), it signals an uptrend. When it crosses below (a “death cross”), it suggests a downtrend.
Keep in mind: moving average signals aren’t perfect. In sideways or choppy markets, they often give false signals (whipsaws). Beginners should expect many small losing trades before a big winner comes along.
Trading Platforms That Support Trend Following
To practice trend following, you’ll need a user-friendly trading platform. Beginners should choose platforms that offer charting tools, built-in indicators, and practice accounts. Some platforms also make it easy to buy and hold ETFs, which is why it’s important to understand ETF expense ratios and fees before committing to a trading or investing strategy.
Recommended Platforms
- TradingView: Great for chart analysis, easy to use, and offers both free and premium plans.
- Thinkorswim (by TD Ameritrade): Robust tools for U.S. stocks and options.
- MetaTrader 4/5: Widely used for forex trading, with customizable trend-following indicators.
- eToro: A Social trading platform that allows you to follow and copy trend-following traders.
What to Look For in a Platform
- Easy access to moving averages, RSI, MACD, and Bollinger Bands.
- Clear chart layouts with beginner-friendly customization.
- Mobile app compatibility for monitoring trends on the go.
Stock Screeners for Finding Trending Stocks
Even if you know how to spot a trend, you still need to identify which stocks or assets are actually trending. This is where stock screeners become invaluable. They allow traders to filter through thousands of securities based on technical and fundamental criteria, saving beginners time and pointing them toward the strongest market opportunities.
Why Stock Screeners Are Essential for Trend Following
- Efficiency: Instead of scrolling through endless charts, screeners highlight only the stocks that meet your criteria.
- Customization: You can set filters for price levels, moving averages, trading volume, and sector strength.
- Objectivity: Screeners reduce guesswork and emotions by focusing on data-driven signals.
Best Beginner-Friendly Screeners
- Finviz: Free and easy to use, it allows filtering by technicals like moving averages, RSI, and volume. It also provides heat maps and sector breakdowns, making it a favorite for trend followers.
- Yahoo Finance Screener: A straightforward option for beginners to quickly explore trending stocks without advanced setups.
- TradingView Screener: Integrated directly into TradingView’s powerful charting platform, enabling seamless transitions between filtering and technical analysis.
For a deeper dive into using stock screeners effectively, check out this Investopedia guide on stock screeners — an authoritative resource that explains screening criteria and practical applications.
Example Screener Strategy
Here’s a simple filter setup beginners can try:
- Price above the 50-day SMA – to confirm the stock is in an uptrend.
- High relative volume – ensures momentum is backed by strong participation.
- Strong sector performance – because leading stocks often move in leading sectors.
This approach quickly narrows thousands of stocks down to a handful of trend-following candidates, giving beginners clarity on where to focus.
Momentum Indicators: Adding Confirmation
While moving averages give you the trend direction, momentum indicators help confirm the strength of the trend. For beginners, combining these tools with a quick framework like how to evaluate a stock in under 10 minutes, can provide both speed and confidence in identifying strong setups.
Useful Indicators for Beginners
- Relative Strength Index (RSI): Shows if a stock is overbought (>70) or oversold (<30). In trend following, it helps confirm continuation rather than reversal.
- MACD (Moving Average Convergence Divergence): Highlights momentum shifts and potential entry/exit points.
- Average Directional Index (ADX): Tells you whether the trend is strong (above 25) or weak (below 20).
Example Application
If a stock is trending above its 50-day EMA and RSI is around 60 (not overbought), this may suggest the trend has strength left.
Risk Management Tools for Beginners
Trend following isn’t just about spotting opportunities—it’s also about protecting yourself. Successful traders understand that volatility is inevitable, which is why learning to manage it is just as important as identifying trends. For deeper insight, you can explore our guide on understanding market volatility: tips for investors, which explains how price swings impact risk and decision-making.
Key Risk Management Tools
- Stop-Loss Orders: Automatically exit a trade if the price drops below a certain point.
- Trailing Stops: Adjusts your stop level as the stock rises, locking in gains.
- Position Sizing Calculators: Tools like Myfxbook or online risk calculators help beginners avoid risking too much on a single trade.
Why It Matters
A beginner might get lucky catching a trend, but without stop-losses, one bad reversal can wipe out weeks of gains. Discipline with risk is what separates hobbyists from sustainable traders.
Practice Accounts and Backtesting Tools
Beginners should never risk real money before practicing. Fortunately, most platforms offer demo accounts where you can trade virtual funds.
Tools to Try
- TradingView’s Paper Trading Mode – Simulates trades on live charts.
- Thinkorswim’s PaperMoney – Allows full-featured practice with $100,000 in virtual cash.
- Backtesting Tools – Built into many platforms, letting you test moving average strategies on past market data.
Example Benefit
Backtesting a simple 50/200-day crossover strategy on the S&P 500 shows how it would have performed in bull and bear markets—giving beginners confidence before trading live.
FAQs
Q: Do beginners need expensive software to try trend following?
A: No. Free tools like TradingView, Finviz, and Yahoo Finance are more than enough to get started.
Q: Can I use trend following on cryptocurrencies or forex?
A: Yes. Trend following works across asset classes—stocks, ETFs, crypto, or currencies—because trends exist everywhere.
Q: How much capital do I need to try trend following?
A: Many brokers allow you to start with as little as $100, but the key is consistency and discipline, not size.
Q: Is trend following profitable for beginners?
A: It can be, but success depends on following rules, managing risk, and avoiding emotional trading. Trend following reduces complexity but still requires patience.
Building Confidence Through Trend Following
Trend following offers beginners a clear, structured way to enter markets without needing deep technical expertise. By combining moving averages, momentum indicators, stock screeners, and risk management tools, new traders can approach the market with confidence.
The key isn’t finding the perfect tool—it’s using simple tools consistently. With paper trading and backtesting, beginners can gain hands-on experience without financial risk.
The Bottom Line
By starting with simple tools—like moving averages to spot trends, stock screeners to find opportunities, and practice accounts to test strategies—new traders can build a structured routine without being overwhelmed. Over time, these habits cultivate patience, risk management skills, and confidence, which matter far more than chasing quick wins.
Ultimately, trend following isn’t about perfection—it’s about consistency. Expect many false starts and losing trades, but understand that a few big winners make the system work. Beginners who learn to respect the trend, protect their capital, and stick with their plan through drawdowns are laying the foundation for long-term success. In markets where uncertainty is the norm, having a clear, repeatable system is a beginner’s greatest advantage.
