Definition of trend in trading

A trend can be defined as the general direction of the price movement of a specific financial instrument in the market over a specific period of time, and the trend is usually represented in the form of a sloping line that represents the upward or downward trend of the price.

A continuing trend in the same direction reflects the possibility of the market trend of the financial instrument continuing, whether upward or downward.

The trend trading strategy is based on the concepts of supply and demand. If there is a strong demand for a specific financial instrument in the market, this leads to an increase in its price, which results in an upward trend. On the other hand, when there is a strong supply for a specific financial instrument, this leads to a decrease in the price of this financial instrument, which results in a downward trend.

1. Uptrend or bull market:

An uptrend in financial markets refers to an upward movement of prices over a specific period of time, with an increase in demand compared to supply pressure on a specific financial instrument, thus reflecting the rise in the prices of that instrument in the market. An uptrend generally begins after a period of hesitation and doubt in the market, starting from the bottoms and then prices rise upwards. An uptrend consists of ascending peaks and bottoms, and there are two basic conditions for an uptrend to occur: when two bottoms and two ascending peaks are formed on the chart, and any breakout below this level indicates a weakness in the trend and the possibility of its reversal.

2. Downtrend or bear market:

A bear market is the moment when the price of a financial instrument begins to decline continuously over a specific period of time. At this point, traders start to exit the market through the best stock and currency trading apps and sell deals exceed buy deals. The downtrend consists of a series of descending peaks and troughs. There are two basic conditions for a downtrend to occur: when there are two lower peaks and two lower peaks. Any breakout above this level indicates a weakness in the trend and the possibility of its reversal.

3. Sideways trend or trendless market:

A sideways market trend indicates that it is not possible to determine whether the price is heading in an upward or downward direction, and the price of a financial instrument fluctuates in a narrow range between support and resistance, without any significant differences during a specific period of time. Usually, large returns are not achieved during a sideways trend period, because the price moves in a very small range, and traders usually do not like this trend.

There is also another classification of trend types according to their duration, which is as follows:

  • Long-term trend or main trend: The duration of this trend ranges from 6 months to two and a half years, and it can be followed on the chart using the weekly time frame or the monthly time frame.

  • Medium-term trend or secondary trend: This trend lasts between one week and two months, and is best observed on the chart when using the daily or 4-hour time frame.

  • Short-term trend or immediate trend: This trend has a duration of less than a week, and is tracked on the chart using the hourly and minute frames.#Binance #BtcNewHolder #BTC #ETH #FutureTarding