Remember the same principles apply to all money markets. In here we will teach you how to spot the current trend of the market. This area quite often confuses new traders, because trends can appear in different time frames. There are short term trend, intermediary term trend and long term trends.
You may have already learn that the markets or share can only move in three possible directions, that is to go up, go down or sideways. Most of the time more sideways than any other direction. We will teach you how to trade the markets when they travel sideways in the advanced section. Don't give up on us now then fun is only beginning.
Here are some examples for you to become familiar with the different trends.
The chart above illustrates a nice upward trend. Had you bought some SEK shares when it came out on the market back in April 2005 and had you hold on you would be sitting on a very nice profit. Trends that hold on longer than a year are considered to be long term trends for traders. However, short term trends do exist inside long term trends.
You want to see what a downward trend looks like in the short term ? With practice you will begin to distinguish between a short term trend and a long term trend. The time frame for a short term trend is usually 2 to 3 months.
Let us show you a downward short term trend. Remember not to trade agains the trend otherwise you will be waiting a while for the share price to recover. The most important part is always know your exit price before you jump in.
Now let's have a look at what a sideways trend looks like.
The trading activity you see inside the green circle above, can be considered as a sideways trend depending on the time frame you are willing to hold the stock or share. To someone who trade intraday the trend might be going up. The time frame you use makes a huge difference.
If you are having a hard time identifying a trend. Look at a chart, if the share price in the lower left corner of the chart is lower than the top right corner of the chart on your computer, you can probably say that the trend is going up. Well at least it is a quick way of determining what direction the share price has (Up, Down or sideways).