You always want to trade in the direction of the main trend. As the old adage goes “The trend is your friend.” And it’s true. Why?
You want to stack the odds.
You want as many odds in your favor as you can get.
If your active on the long side, you want to buy during an uptrend.
If your active on the short side, you want to buy during a downtrend.
It’s as simple as that.
How do you identify a trend?
It shouldn’t take you more than a few seconds to identify the direction of a trend.
A trend is generally defined as the overall direction of data points in a time series.
Let’s look at an uptrend.
First, the chart goes from bottom left to top right.
Second, there is a series of higher highs and higher lows.
Of course, the reverse works too for downtrends.
These are the basics.
Now you can use trendlines, moving averages, or other types of indicators to tell you that.
Now what’s important is that there are different timeframes.
You could be in a short-term downtrend, but in a long-term uptrend.
So, choose the timeframe that suits your strategy.
But the odds are highest when all timeframes are aligned: Short-term, mid-term, and long-term.
Only a small percentage of the time is the market in a trend. Very often it’s just going sideways. These are the most dangerous time for active investors. When there’s no trend, the market is typically volatile and will move in both directions viciously.
Whenever you think the market is about to go into your favor, it hits a wall and turns around.
These moves can be exploited as well, if your timeframes are shorter.
But generally, the big money is made during strong uptrends.
Why?
Two reasons:
First, objects in motion tend to stay in motion.
Second, there is typically little or no overhead supply.
Hence, most people holding it sit on a profit.
Not all trends are equal.
The steeper the trend, the stronger. But it is also more vulnerable to larger pullbacks or sudden reversals because the price has moved quickly and may become overextended.
On the other hand, steady trends move up more slowly and smoothly.
They might not grow as fast, but they’re usually more reliable and less likely to have sudden drops. Steady trends can be easier to hold onto and less stressful because they don’t surprise you as much.
Bonus Tip: You can check the current market trend here.
You always want to trade in the direction of the main trend. As the old adage goes “The trend is your friend.” And it’s true. Why?
You want to stack the odds.
You want as many odds in your favor as you can get.
If your active on the long side, you want to buy during an uptrend.
If your active on the short side, you want to buy during a downtrend.
It’s as simple as that.
How do you identify a trend?
It shouldn’t take you more than a few seconds to identify the direction of a trend.
A trend is generally defined as the overall direction of data points in a time series.
Let’s look at an uptrend.
First, the chart goes from bottom left to top right.
Second, there is a series of higher highs and higher lows.
Of course, the reverse works too for downtrends.
These are the basics.
Now you can use trendlines, moving averages, or other types of indicators to tell you that.
Now what’s important is that there are different timeframes.
You could be in a short-term downtrend, but in a long-term uptrend.
So, choose the timeframe that suits your strategy.
But the odds are highest when all timeframes are aligned: Short-term, mid-term, and long-term.
Only a small percentage of the time is the market in a trend. Very often it’s just going sideways. These are the most dangerous time for active investors. When there’s no trend, the market is typically volatile and will move in both directions viciously.
Whenever you think the market is about to go into your favor, it hits a wall and turns around.
These moves can be exploited as well, if your timeframes are shorter.
But generally, the big money is made during strong uptrends.
Why?
Two reasons:
First, objects in motion tend to stay in motion.
Second, there is typically little or no overhead supply.
Hence, most people holding it sit on a profit.
Not all trends are equal.
The steeper the trend, the stronger. But it is also more vulnerable to larger pullbacks or sudden reversals because the price has moved quickly and may become overextended.
On the other hand, steady trends move up more slowly and smoothly.
They might not grow as fast, but they’re usually more reliable and less likely to have sudden drops. Steady trends can be easier to hold onto and less stressful because they don’t surprise you as much.
Bonus Tip: You can check the current market trend here.
You always want to trade in the direction of the main trend. As the old adage goes “The trend is your friend.” And it’s true. Why?
You want to stack the odds.
You want as many odds in your favor as you can get.
If your active on the long side, you want to buy during an uptrend.
If your active on the short side, you want to buy during a downtrend.
It’s as simple as that.
How do you identify a trend?
It shouldn’t take you more than a few seconds to identify the direction of a trend.
A trend is generally defined as the overall direction of data points in a time series.
Let’s look at an uptrend.
First, the chart goes from bottom left to top right.
Second, there is a series of higher highs and higher lows.
Of course, the reverse works too for downtrends.
These are the basics.
Now you can use trendlines, moving averages, or other types of indicators to tell you that.
Now what’s important is that there are different timeframes.
You could be in a short-term downtrend, but in a long-term uptrend.
So, choose the timeframe that suits your strategy.
But the odds are highest when all timeframes are aligned: Short-term, mid-term, and long-term.
Only a small percentage of the time is the market in a trend. Very often it’s just going sideways. These are the most dangerous time for active investors. When there’s no trend, the market is typically volatile and will move in both directions viciously.
Whenever you think the market is about to go into your favor, it hits a wall and turns around.
These moves can be exploited as well, if your timeframes are shorter.
But generally, the big money is made during strong uptrends.
Why?
Two reasons:
First, objects in motion tend to stay in motion.
Second, there is typically little or no overhead supply.
Hence, most people holding it sit on a profit.
Not all trends are equal.
The steeper the trend, the stronger. But it is also more vulnerable to larger pullbacks or sudden reversals because the price has moved quickly and may become overextended.
On the other hand, steady trends move up more slowly and smoothly.
They might not grow as fast, but they’re usually more reliable and less likely to have sudden drops. Steady trends can be easier to hold onto and less stressful because they don’t surprise you as much.
Bonus Tip: You can check the current market trend here.
