1. Uptrend (bullish trend)
The price is gradually rising: each subsequent peak and “bottom” is higher than the previous ones.
• Here you buy (open a deal on growth) to earn on the continuation of the rise.
2. Downtrend (bearish trend)
The price is falling: each subsequent peak and “bottom” is lower than the previous ones.
• In this case, you sell (or open a short, if the exchange allows it).
3. Sideways market (flat)
The price “moves” in a narrow corridor, does not rise or fall.
• In such situations, trend trading usually does not work.
How to understand that there is a trend?
• Chart: Visually, it is clear that the price is going up or down, and not “dangling”.
• Indicators:
• Moving averages (MA): If the average price line is directed upwards, the trend is up, downwards, the trend is down.
How to trade:
1. Buy on pullbacks in an uptrend:
When the price has dropped a little but then starts to rise again, this is a good entry point.
2. Sell on pullbacks in a downtrend:
If the price has risen a little in a general decline, this is an opportunity to enter a sell trade.