By identifying what the current stock trend is, you have the ability to go with it and maximize profits. Riding the stock trend is essential to making money in the stock market. The most money is made when you enter in the beginning signaled by a breakout into higher prices. Trends can can be identified in almost any time frame you look at. When first learning to trade in stocks, it’s best to spot new trends and breakout on charts with weekly and daily charts. When first starting out, you want to gain a rhythm to your technique and become familiar with a system of action in your thought processes. When working with longer time frames, this gives you a chance to think and make decisions.
Stock Trading Topics
How to Identify Stock Trends
Some stock trends are longer than others. If you are looking for the biggest of stock trends I would focus on the weekly charts. Daily charts have intermediate trends.
Up Trends can be defined by higher highs (HH) and higher lows(HL).
Down Trends can be defined as Lower Highs (LH) and Lower Lows (LL)
In Conlusion, the major trend is what we are looking for. The MAJOR TREND is what will bring wealth and increase your equity curve. Below is an example of a breakout in Urban Outfitters (URBN). This chart is a real world example of what kind of gains can be achieved by capturing the major trend. Each of these robust trends are preceded by a BREAKOUT to all time highs. In the next tutorial we will dissect the anatomy of a Breakout, as well as identify the point of entry that has the least amount of risk. It is essential to trade with the current stock trend. If the stock trend is up, you should be buying. If it is down, you should be selling.