| A stock market trend is a force that demands our | | | | significantly longer than our trading position can help |
| respect. No matter how much we try to make good | | | | us see the strong trends pulling on price movement. |
| trades, we'd be fools to try to fight the power of a | | | | And with that understand that a sound stock market |
| trend. So how do we respect the trend when day | | | | trading system will point out obvious trends. |
| trading? First, by identifying it. And secondly, by using | | | | Once you've identified the trend, it's time to look for |
| it to guide our trading preferably via. sound stock | | | | a signal to enter a position. For that, we watch price |
| market trading system. | | | | movement. A couple indicators useful for day trading |
| Before we talk about identifying major trends, I | | | | can be stochastic oscillators and again, moving |
| want to distinguish trends from price movements. A | | | | averages. |
| stock market trend is a major movement that the | | | | Stochastic oscillators compare price ranges over a |
| market is pushing, either up or down (sometimes the | | | | period of time to estimate whether a stock is |
| market is trendless or flat). Price movement can | | | | overbought or oversold. With this, we can guess with |
| fluctuate up or down within a single trend. The key is | | | | some accuracy which way the price movement |
| to trade when the trend and the price movement | | | | should go. Moving averages can also be useful if we |
| agree. When they both agree, you should, too. | | | | set a shorter time period for them. We then see day |
| So how do we identify a stock market trend? There | | | | trading price movements as micro trends. And as I |
| are a number of tools we can use aside from a | | | | mentioned before, when a major trend agrees with |
| stock market system. Two chart indicators that I | | | | the price movement, it's a good indication of when to |
| recommend when day trading are the MACD | | | | enter a trade. |
| (pronounced "Mac-D") and the CCI. The MACD is a | | | | So, to recap, respect the trend. The problem many |
| moving average. Used alongside other moving | | | | novice traders have is not that they can't understand |
| averages, you can get a quick picture of overall | | | | the analytics, but that somehow their willpower will |
| market trends and when they are changing. | | | | make them succeed at day trading regardless of |
| The CCI (Commodity Channel Index), which also uses | | | | what a stock market trend is doing or. If you believe |
| moving averages, can help identify trends by showing | | | | that (whether knowingly or unknowingly with your |
| when they are going up or down out of their typical | | | | actions), you may as well believe that you can stop a |
| ranges. Watching these indicators for periods of time | | | | train with your bare hands. |