“A trend is your friend till it bends at the end”

What is Trend?

A market trend is a perceived tendency of financial markets to move in a particular direction over time. When the price is moving in one overall direction, such as up or down, that is called price is moving in a trend.

The trends are classified as secular for long time frames, primary for medium time frames, and secondary for short time frames.

Two types of Trend –

1. Up Trend
2. Down Trend

Up Trend – An uptrend is characterized by higher swing lows and higher swing highs.

Down Trend – A downtrend is characterized by lower swing lows and lower swing highs.

How to draw a Trend Line?

A trend line is a line drawn along swing lows in an uptrend, or along swing highs in a downtrend. It shows a possible area where the price may pull back to in the future.

How Trend Trading Works?

Trend trading strategies assume that a security will continue to move in the same direction as per prevailing trend. Such strategies often contain a take-profit or stop-loss provision in order to lock in a profit or avoid big losses if a trend reversal occurs.

Trend trading is used by Intraday Traders, Swing Traders and Long-Term traders. Some traders opt to buy during an uptrend when the price pulls back to trend line, and then bounces higher off of, a rising trend line. Similarly, some traders opt to short during a downtrend when the price rises to trend line, and then falls away from, a declining trend line.

Trend traders also look for chart patterns, such as flags or triangles which indicate the potential continuation of a trend.

For example, if the price is rising aggressively and then the up move may form flag or triangle along with the uptrend. A trend trader will watch for the price to break out of the pattern to signal a continuation of the uptrend to take entry in trade.

For Example YES Bank

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