Every trader must find the strategy best suiting their trading style, but trend trading is among the simplest to learn and follow. The basic formula: Analyze a security’s momentum – either up or down – and take a position on its trend. If the stock is heading upward, the trader pursues a long position. When the trend is downward, the trader takes a short position. “Trade with the trends” is a wise market axiom.

Tools to Evaluate Trend Trading

With trend trading, there is no single tool to determine success. Instead, traders must rely on an arsenal of indicators to guide them in making trend trading decisions. Trend lines in a chart consist of the stock’s trending highs, while the other marks the stock’s trending lows. Other useful tools include:

  • Moving averages – a stock’s total closing price for X number of days, divided by that number
  • Relative Strength Indicators – measurement of price movement speed changes
  • Volume measurements – amount of trading of a specific asset in a particular timeframe
  • Directional indices – measurements of trend direction and strength
  • Stochastic oscillator – this indicator measures support and resistance levels.

Use these tools holistically when trend trading, as each tool imparts information you need.

How Do Moving Averages and Relative Strength Indicators Help Me Evaluate Trends?

The moving average is among the most visible on any chart, and the easiest to use. Use it for any time frame you want, whether a short-term of five days or a long-term of 100 days.

For longer-term trends, the moving average serves as a support in an upward trend and as resistance in a downward trend,

Relative strength indicators (RSI) provide momentum information, and whether a trend is tending toward reversal in either direction. On a scale of zero to 100, traders consider a security with an RSI of 70 or more as not justified by the fundamentals and due for a correction, and an RSI of 30 or below as too low of a price and ready for an upward move.

How Do Volume Measurements, Directional Indices and Stochastics Help Me Evaluate Trends?

Higher volume means there are better odds of a price change increase, which you can use to predict future trends. Volume measurement also helps verify trends. Directional indices calculate up market rising momentum and down market lowering momentum. Just as you should “trade the trend,” you should never bet against the stochastic. It helps you identify exit and entry points.

The SureTrader Advantage

At SureTrader, our clients have access to top charting tools. View all the necessary indicators at a glance, and make your trading decision accordingly. It’s just one more aspect of the SureTrader advantage.

Disclaimer: All information provided “as is” for informational purposes only, not intended as a recommendation to buy or sell. Swiss America Securities, Ltd. is not liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein.
OCUL Chart 2

Day Trading Strategies – Trend Trading

Every trader must find the strategy best suiting their trading style, but trend trading is among the simplest to learn and follow. The basic formula: Analyze a security’s momentum – either up or down – and take a position on its trend. If the stock is heading upward, the trader pursues a long position. When the trend is downward, the trader takes a short position. “Trade with the trends” is a wise market axiom.

Tools to Evaluate Trend Trading

With trend trading, there is no single tool to determine success. Instead, traders must rely on an arsenal of indicators to guide them in making trend trading decisions. Trend lines in a chart consist of the stock’s trending highs, while the other marks the stock’s trending lows. Other useful tools include:

  • Moving averages – a stock’s total closing price for X number of days, divided by that number
  • Relative Strength Indicators – measurement of price movement speed changes
  • Volume measurements – amount of trading of a specific asset in a particular timeframe
  • Directional indices – measurements of trend direction and strength
  • Stochastic oscillator – this indicator measures support and resistance levels.

Use these tools holistically when trend trading, as each tool imparts information you need.

How Do Moving Averages and Relative Strength Indicators Help Me Evaluate Trends?

The moving average is among the most visible on any chart, and the easiest to use. Use it for any time frame you want, whether a short-term of five days or a long-term of 100 days.

For longer-term trends, the moving average serves as a support in an upward trend and as resistance in a downward trend,

Relative strength indicators (RSI) provide momentum information, and whether a trend is tending toward reversal in either direction. On a scale of zero to 100, traders consider a security with an RSI of 70 or more as not justified by the fundamentals and due for a correction, and an RSI of 30 or below as too low of a price and ready for an upward move.

How Do Volume Measurements, Directional Indices and Stochastics Help Me Evaluate Trends?

Higher volume means there are better odds of a price change increase, which you can use to predict future trends. Volume measurement also helps verify trends. Directional indices calculate up market rising momentum and down market lowering momentum. Just as you should “trade the trend,” you should never bet against the stochastic. It helps you identify exit and entry points.

The SureTrader Advantage

At SureTrader, our clients have access to top charting tools. View all the necessary indicators at a glance, and make your trading decision accordingly. It’s just one more aspect of the SureTrader advantage.

Disclaimer: All information provided “as is” for informational purposes only, not intended as a recommendation to buy or sell. Swiss America Securities, Ltd. is not liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein.