Why are Trend Lines Important

Trend lines (AKA Trendiines) are an important technical analysis tool that identify and isolate the slope and direction of price in stocks, Futures and Forex trading. Trend analysis can be applied to any traded asset or security and is a simple method to visualize price movement.

Trend lines are one of the most utilized technical analysis tools and for many trading trader separates success from failure. Trend lines are easy to understand and can be applied with few rules. Trend lines example price as an accurate straight line and provide an answer as to what price is doing right now.

Trend Lines are one of the most utilized technical analysis drawing studies and for many separates success from failure during their initial trading experience. Be a trader who knows how to trade the trend.”

Why You Should Trade With the Trend

stop-and-listen-to-advicePrice within a trend goes up and down. It creates a zig-zag saw-tooth pattern. The zig-zag pattern is not as perfect as an actual saw’s blade, however it is not difficult to identify this price behavior on the trading chart.

Trade the trend upward; higher points of the saw-toothed pattern are local retail prices and the lower price points are local wholesale price points. A trade entered at a retail price when price is near a high point will probably retrace downward before it proceeds upward, if it proceeds upward. Retail price presents a high probability of trade failure. Wholesale price is a lower probability of trade failure. If a trade fails and is entered at a wholesale price it provides the greatest opportunity to scratch. A scratch is the exit from a trade with no profit, with a small profit or a small loss. All technical trading success hinges on the application of entering trades at wholesale price areas. It is the primary attribute that separates novice from experienced Forex trading or any trading. Always trade the trend.

Trade the trend downward; lower price points of the saw-toothed pattern are local retail price and higher price points are local wholesale price points. These are shorted trades and retail price points provide the highest probability of trade failure. They are price areas where price over-extends in the same direction of the trend and are farther from the trend line.

 

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