What is a Stock Trend?
As opposed to top picking , which is normally a bad idea, (unless you know certain stock market predictions techniques that can pin point market turning points often to the exact day and ride the trend afterward), a trader should look at stocks that keep going up like they will continue to go up. There is no top until after it forms. For example if a stock goes from $31 to $50 1 year, then to $80 the next we should assume that it will go even higher this year. Provided it is still trending up. So, how can you tell if a stock is in an uptrend ? Do you all remember what support and resistance are? If both support and resistance are going up we are in an uptrend, in other words if the stock is making higher highs and higher lows. On the other side when we are in a downtrend , both support and resistance should be heading downward. The stock will be making lower highs and lower lows. In this case we would assume that a stock is going down until we see otherwise. Trend traders will buy a stock at support and ride it up until it is not in an uptrend anymore. Or until it breaks support. When a stock, that was previously making higher highs and higher lows, breaks support and makes a lower high and a lower low it is said to be in a down trend. Trading with the trend is possibly the most important part of technical analysis. You should not be bullish on a stock that is in a downtrend, or bearish on a stock that is in an uptrend.
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