How To Determine Trend For Beginners

Trends analysis is the technique that predicts future movement or direction of financial instruments based on the available data on the trading chart. Beginners should note that their understanding of trend flow will make them realize reasonable profit but most of them usually go counter-trend. You can use the trading approach to combine the trend with the momentum of the market as it goes up, down, and sideways. 

In technical analysis, beginners should look out for the line graph which is an effective and simple tool that reveals all clusters and market noise. With this tool, traders can discover the chart flow and whatever happenings in the market from time to time. A line graph is a perfect starting point to discover the overall market situation. 

Beginners should also understand highs and lows in trends trading. Highs and lows examine the existing market pattern and chart formation.  Conventional technical analysis holds that when there is an uptrend, there will be higher-highs as a result of the higher price which has been influenced by large buyers. When buyers keep buying the dips earlier than expected, the lows will be higher as well which is referred to as higher-lows. Subsequently, during the downtrend price makes lower-lows and low-highs which is a result of surplus sellers moving the price lower as there is no equilibrium between buyers and sellers. 

Moving averages is yet another important trading tool in technical analysis which is used to identify market directions. When analyzing the trend direction using this tool, identify the length of the moving average to get a signal as soon as the market turns. Also, a small moving average can present many false signals as it reacts too soon to the price movement. The signals might also be too late as it rides trends longer than expected. 

Trading with the trend through technical analysis will make you understand channels and trend-lines. This tool is used to determine the direction of a trend concerning the market range of a period. 

The trend-lines are used for later trend stages, unlike early trend stages that are controlled by the moving averages with highs and lows. Trend-lines are used to discover current changes of established trends and whenever strong trend-lines break, it shows the beginning of a new trend.

Learning trend trading through technical analysis will yet be possible through the use of the Buy Sell indicator with colour background for the trend direction. Through this tool, you can analyze the strength of the trend in the given direction. You will know the bullish strength in the green line and the bearish strength in the red line. 

Through these elaborated technical analysis tools, the beginners should have adequate knowledge about the  trend of the chart.  

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