Trading with the trend can be very profitable, but you need to be on the lookout for changes
If you can find charts showing the strongest trends, you're in line for profitable trades. For example, spotting a strong uptrend or downtrend.
So how can you spot these on charts? And what should you watch for to indicate a change in trend could be coming?
Read on to find out…
Strong trends are great for traders
If you find a chart showing a strong trend
, whether up or down, you should trade with it. Chances are you’ll profit from it.
For instance, here’s a chart showing a strong uptrend…
And here’s a chart showing a strong downtrend…
If you manage to get into a trade on a strong trend, you need to keep an eye on what’s going on with the trend line. As well as using them for confirmation that the trend is going to continue, you can also use them to let you know that a trend has come to an end.
This can be extremely useful for managing your trades.
The tell-tale signs of a change in trend
Have a look at the chart below…
You can see above that the sustained upward trend has come to an end. But before this happened, there were signs that change was afoot.
Point A on the chart marks where the uptrend stopped, explains Frank Hemsley in Profit Watch
. This saw the end of higher highs and higher lows.
Point B marks a possible head and shoulders patterns. This is a sign that a downward trend could be around the corner.
Point C shows you the start of the new downward trend.
You should use trend lines on your charts. They’re a good indicator of whether or not you should stay in a trend or not. If the price breaks through them, it’s time to be alert and make changes to your trades if necessary.
So there you have it. Why trading with the trend can be very profitable and why you need to be on the lookout for changes.
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