What is a trend?
Trend – What is a trend?
Trend or a Market trend. What is a trend?
Traders use trend to see the direction of the market.
- Market trend, prolonged period of time when prices in a financial market are rising or falling faster than their historical average, also known as “bull” and “bear” markets, respectively.
Bull Trend – What is a bull trend?
A bull trend or a bullish trend is one which is controlled by buyers.
The interesting part of Bull trends is that the buyers are in control. If you look at the green supportive trend line you will see that every time the sellers reverse price and bring price to the trend line, the buyers step in and keep the direction of the market.
This is where the phrase comes in “Trend is your Friend” Don’t go against the market direction.
One of the easiest ways to see trend in the market is the use of Moving Averages. The MA gives you the average price over the amount of time specified in the MA. So a 200 MA which is used widely in the trading industry is the average of 200 days trading close price. When price is above the 200 MA we are considered to be in a bull trend or bull market.
A single day dip below the 200 MA doe not make it a bear market. Price would have to be under the 200MA much longer than a single day to consider it a Bear market.
Bear Trend – What is a bear trend?
A Bear trend or a bearish trend is one which is in control by the sellers. The opposite of a bull trend.
This is also using “Trend is your Friend”
Using the moving average you can see that the price gets under the 200MA and then trends with direction controlled by sellers.