Trend trading is a trading style that attempts to capture gains through the analysis of an asset's momentum in a particular direction. When the price is moving in one overall direction, such as up or down, that is called a trend.
Trend traders enter into a long position when a security is trending upward. An uptrend is characterized by higher swing lows and higher swing highs. Likewise, trend traders may opt to enter a short position when an asset is trending lower. A downtrend is characterized by lower swing lows and lower swing highs.
KEY TAKEAWAYS
Trend trading is designed to take advantage of uptrends, where the price tends to make new highs, or downtrends, where the price tends to make new lows.
An uptrend is a series of higher swing highs and higher swing lows. A downtrend is a series of lower swing highs and lower swing lows.
In addition to looking at swing highs and lows, trend traders utilize other tools such as trendlines, moving averages, and technical indicators to help identify the trend direction and potentially provide trade signals.
Understanding Trend Trading
Trend traders enter into a long position when a security is trending upward. An uptrend is characterized by higher swing lows and higher swing highs. Likewise, trend traders may opt to enter a short position when an asset is trending lower. A downtrend is characterized by lower swing lows and lower swing highs.
KEY TAKEAWAYS
Trend trading is designed to take advantage of uptrends, where the price tends to make new highs, or downtrends, where the price tends to make new lows.
An uptrend is a series of higher swing highs and higher swing lows. A downtrend is a series of lower swing highs and lower swing lows.
In addition to looking at swing highs and lows, trend traders utilize other tools such as trendlines, moving averages, and technical indicators to help identify the trend direction and potentially provide trade signals.
Understanding Trend Trading
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