DEFINITION of trend
The trend is when a market is making move upwards or downwards. Identifying the beginning and end of trends is a key part of the market analysis.
WHAT IT IS IN ESSENCE
Trends can apply to individual assets, sectors, or even interest rates and bond yields.
The most common trends are uptrends and downtrends. An uptrend can be identified when both the high and low points of a movement are getting higher. A downtrend is when the high and low points are getting lower.
The direction in which the price of a stock or a group of stocks or the stock market as a whole movement is the trend. On market, it signifies the movement of the stock prices, in any one direction compared to its historical prices.
It is usually noting as “higher highs” and “higher lows” in an uptrend and “lower highs” and “lower lows” in a downtrend.
HOW TO USE
When trading a trend-based strategy, traders usually pick the major currencies as well as any other currency utilizing the dollar. Because these pairs tend to trend and be more liquid than other pairs.
It does not predict market direction. Trend trading demands self-discipline to follow precise rules. There are no guessing or wild emotions. It involves a certain risk management that uses the current market price, equity level in your account, and current market volatility.
Trend traders use an initial risk rule to determine their trading size at entry. That means you know exactly how much to buy or sell based on how much money you have. Changes in price may lead to a gradual reduction or increase in your initial trade.
On the other hand, adverse price movements will lead to an exit. A trend trader’s average profit per trade is significantly higher than the average loss per trade.
This is the only trading strategy that can be traded from everywhere. As long as price data is available, all else is irrelevant.