Plus500

Plus500

Trend determination is obviously important for trend followers, but anyone trading in any style should be aware of the trend in the market they are trading.

The overall trend can influence your trading style. If the trend is up, you probably will have a different way you treat buy signals from counter trend sell signals.

If the trend is sideways, then applying a trend following method would be frustrating and probably not profitable.

A downtrend in certain markets can have a different character than an uptrend. Beginnings of trends can be easier to trade than end of trends, in many cases.

Therefore, it is important to know what the trend is.

But to complicate matters, there can be many trends at play in the same market, even on the same chart. There are trends within trends.

Different period lengths on moving averages, or indicator inputs, can signal a different, often confusing and conflicting trend. There can be a counter trend down move on a 30-minute chart, while the daily chart is showing a powerful uptrend, while the monthly chart is showing a sideways trend.

When they all line up, it is the most comfortable and reassuring time to take a trade, but if you wait for everything to be in synch you would probably trade very little, and often not in a timely manner. And often the comfortable and easy trade is the one everyone sees, and it often turns out to be untimely.

It is best to keep it simple and just trade off the time frame of the chart you are analyzing.

Most of us want indicators to guide us, as indicators are quantifiable. We can lean on them with more confidence. However, the purest and fastest way to determine trend is just through studying the price structure. Price does not lag. Price is not derived from anything.

It is current. It might frustrate, but it doesn