“Riding the trend line” might sound like something out of a movie or a book, but it is actually something that has a much more commonplace source, namely the financial market. The trend line is essentially a visual representation of how a market moves along with the repercussions that are caused due to the movement, which are mainly felt in the form of price fluctuations. The longer and more elaborate the movement of the market, the stronger and more prominent is the trend. The basic principle that governs trend trading involves trading on the basis of the momentum of the market. However, the market is a volatile place and hence, instant trend reversals are a common occurrence.
Tips for Efficiently Trading through Trends
To help you navigate through such a volatile place and to help you master the art of trend trading, we bring you five trend trading tips that can help you in the time of need:
Being Patient: Just like any art form, being patient is a crucial element of being good at trend trading. Trends are mainly dependent upon the emotions of the investors and hence, the more patient and still one is, the better the gains. Instead of selling whenever a high approaches, or buying as soon as a low emerges, be more open to the fluctuations; learn from them, absorb them, embrace them and then decide.
Learn from the Ancients: Even though trading does not require constant technical analysis for stock trends, one can definitely benefit from some background research. Learning the subtle art of Candlestick Chart Reading and Fibonacci Retracement can open up a world of new opportunities and insights that were hidden from you.
Find the Balance: A crucial aspect of trend trading or swing trading involves understanding resistance and support. However, understanding is not enough; one needs to utilize both to one’s own advantage. If you are in for the long run and are also ready to take a considerable amount of risk, you can go ahead and pick a top and a bottom point within the trend. After this, the waiting game starts where you begin analyzing the resistance that the trend faces, which is essentially where buying starts, from the perspective of whether or not it is supportive to your gains or not.
Give in to the Flow: Always make sure that you listen to the trend rather than consider it an enemy, no matter how ruthless it might seem as far as your position of loss/gain is concerned. When indulging in stock analysis, make sure you listen or at least be open to what the trend has to say. One can find crucial signs that signal the appropriate moment to buy or sell, such as swing points, swing depth, consecutive high and low days, and more.