Trend trading is a strategy that seeks to capitalize on an asset's directional momentum without trying to predict precise peaks and valleys—which is exceedingly difficult. Instead, trend traders concentrate on detecting and following recognized market trends.
Below, we consider four trend-trading indicators that have proven reliable over time.
Key Takeaways
Trend trading focuses on market direction over the intermediate and long-term time frames.
Moving averages filter market noise and signal reversals through crossovers.
MACD reveals both direction and underlying momentum, including divergence, in a single indicator.
RSI identifies sustainable pullback opportunities within trends and warns of weakening momentum.
OBV instead considers volume as a leading indicator.