| It is part of human nature to want to feel like we | | | | stock prices before they happen. |
| accepted, and a welcome member of something | | | | It's important for new investors to realize that the |
| larger than ourselves. If you're relatively new to the | | | | market trend is one of the most important things |
| stock market trading game, you've probably heard | | | | they can learn to identify on stock market charts. In |
| people say things like "the trend is your friend," or | | | | order to confirm that a trend is upward moving, you |
| "never go against the trend," without really knowing | | | | have to be able to point out at least two low points |
| what they meant. Although the stock market is a | | | | on the chart, and the second low point must be |
| very dynamic place, with prices constantly moving up | | | | charted at a point that is higher than the first. |
| and down all the time, it's important for all new | | | | Conversely, a downward trend can be confirmed by |
| investors to realize that prices don't just increase or | | | | looking for successive high points, each of which |
| decrease arbitrarily: what you're looking at is the | | | | closes lower than the previous one. |
| manifestation of the market trend. | | | | Of course, you won't have to spend much time |
| Outside the stock market, trends don't always make | | | | looking at stock charts to realize that the market |
| much sense, especially if you're talking about fashion | | | | trend doesn't always take a completely positive or |
| or music trends. Thankfully, the stock market trend is | | | | completely negative slope throughout the day, week, |
| usually motivated by much more logical principles of | | | | or month. There are smaller trends that form within |
| economics and mathematics, although public opinion | | | | the larger trends, which can sometimes appear like |
| and emotionalism can still act as interruption some of | | | | pauses or even retracements in the larger trend. |
| the time. Basically, trends in the stock market are | | | | These internal trends are classified as intermediate, |
| defined as the overall direction in which prices are | | | | short-term or long-term, depending on where they |
| observed to be moving, either up, down, or neutral | | | | are positioned inside the larger trend. Becoming skilled |
| (flat). If you've been studying up on the practice of | | | | at spotting and identifying trends is an important skill |
| technical analysis, you'll know that trends are very | | | | for a trader, because it can prevent them from |
| important for predicting the future movements of | | | | making premature sales, or early purchases. |