”Trend continuation” is the tendency for trends to continue in their current direction. As Sir Isaac Newton once said: > [!quote] Sir Isaac Newton > A body in motion tends to stay in motion unless acted on by an outside force. In the investment world, asset prices show a strong tendency to trend. Trends begin due to under-reaction to new information in the short term, but over-extend once information proliferates due to a bandwagon effect. When the trend over-extends it eventually reverses due to the opposing force of “[[Mean Reversion]]”. > [!quote] Ed Seykota > The trend is your friend except at the end where it bends. The power of trend continuation is one of the most powerful forces in the stock market, and is one of the foundational ideas behind the styles of “Momentum Investing” and “Trend following”.