What can a trend-following approach help traders achieve?

A trend-following approach helps traders achieve the ability to separate meaningful price movements from background noise. This strategy relies on the premise that stocks which are trending will continue to do so for a certain period. By focusing on established trends, traders can better identify significant price movements that reflect underlying market conditions rather than random fluctuations or "noise" that may confuse or mislead less experienced market participants.

Separating meaningful movements from noise is crucial, as it allows traders to make more informed decisions based on actual market sentiment and momentum. This approach can enhance their trading accuracy and help in recognizing genuine opportunities, as opposed to reacting to every slight movement in the market. Consequently, trend followers can focus their strategies on capturing larger price moves that have the potential for greater profitability.