Trading with the trend is trading with the flow.
When the prevailing trend is up, why would you want to look for short entries when buying might result in much smoother trades?
Many amateur traders, even when facing a very obvious trend can’t stop trying to predict reversals and burn their fingers going counter-trend, whereas they could have made so much more money by simply joining the trend.
But even if you are not a trend-following trader, you can combine the concept of trading with the trend and with momentum with your regular trading approach. Knowing where the price is going and which side of the market is stronger is an important trading skill.
To be able to correctly read price action, trends and trend direction, we will now introduce the most effective ways to analyze a chart.
Intro: The different market phases
Before we learn how to identify the trend, we should first be clear what we are looking for.
It may sound too simplistic first, but stick with me for now and you will soon see the power of this analysis approach.
Markets can do one of three things: go up, go down, or move sideways.
Of course, how fast (or how slow) and how long the individual periods last changes all the time, but the price can only do one of those three things.
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