Identifying the Trend
The key to identifying the trend of a stock or stock market index is to examine a graph of its price action. A bull trend is identified by a series of peaks and troughs in price action whereby each set of peaks and troughs is higher than preceding peaks and troughs. Using a ruler you can make a line that touches each peak and another line that touches each trough. A bull trend should have an upward sloping trend line.
A bear trend is identified by a series of peaks and troughs in price action whereby each set of peaks and troughs is lower than preceding peaks and troughs. A line through these peaks and troughs will show a downward sloping trend line.
Most Likely Price Action is for the Trend to Continue
The key to the the trend is your friend catch phrase is that the most likely price action is for the trend to continue. That means that by trying to be the hero and call a bottom in a downward trending market you are likely to see the trend continue, and for you to lose money. Dont call bottoms! Ensure that your trades are onside with the trend and rake in profits as the trend continues.
