| "What is the overall stock market trend?" Have you | | | | may take a pause or may correct downward for a |
| heard people asking you about this? Do you know | | | | few days before resuming the uptrend again. |
| how to answer this question? If you are a serious | | | | In a consistent up trending market, you will see a |
| traders or investors who like to make money in the | | | | price keep breaking new high that is higher than |
| stock market. Van K. Tharp, author of Trade Your | | | | previous high. Similarly, the low will also be higher than |
| Way to Financial Freedom, said that "Every trader | | | | previous low. On the other hand, in a consistent |
| needs a trend to make money". So, you must really | | | | down trending market, you will see a price keep |
| know how to read and study the stock market | | | | breaking new low that is lower than previous low |
| trends. This is the first step you must take to be | | | | with high lower than previous high. |
| successful in the stock market. | | | | There is one more scenario that if you see the high |
| Now, what is a trend? Trend means the general | | | | is about the same level as previous high with low |
| direction of the price movement of a security. The | | | | about the same level as previous low. Then, the |
| security can be a stock or stock market indices, or | | | | market is oscillating up and down in a sideway |
| even forex. You will generally need to plot the | | | | market and not trending market. |
| security price on a chart in order to read the trend | | | | If you are really serious about making money in the |
| much clearer. | | | | stock market, you must remember this definition of |
| In simple words, if you look at the stock price chart, | | | | uptrend, downtrend and sideway market by hard. |
| the trend is UP if the price is consistently going up. | | | | Recognizing the stock market trends is your first |
| On the other hand, the trend is DOWN if you see | | | | step towards successful stock market trading. After |
| the stock price is consistently moving downward. | | | | recognizing whether the market is in the uptrend, |
| A trend is called a consistent trend only if you see | | | | downtrend or sideway market, you can subsequently |
| the same pattern or trend keep repeating time after | | | | apply the appropriate trading system to either buy |
| time. Both you and me know that it is totally | | | | low sell high or sell high buy low to make money in |
| impossible to see the stock price going up or down in | | | | the stock market. |
| a straight line. There bounds to have up and down | | | | Remember, "Trend is your friend, it will bite you if |
| interchangeably. For example, you will see an up | | | | you ignore it". |
| trending price for a few days, then, the stock price | | | | |