Trader Series, Cognitive Enhancement and Learning Methodology Series (5)
Trend
"The trend is your friend" is an abstract expression of the deep dynamics of the market.
A trend is not just a simple description of price direction, but a comprehensive embodiment of market narrative, psychological state, and capital flow. It has fractal characteristics, displaying similar but not completely identical structures across different time scales.
An upward trend on the daily chart may contain multiple pullbacks on the hourly chart, while a trend on the weekly chart may encompass several reversals on the daily chart.
Understanding the lifecycle of a trend is also crucial — they are born (formed), grow (accelerate), mature (slow down), age (oscillate), and finally die (reverse).
Different stages require different trading strategies; making friends with a newly born trend is a completely different experience than making friends with a dying trend.
On a deeper level, trends reflect the flow of power and capital in the market.
Understanding trends means understanding where capital flows from and to, which market participants are gaining greater influence, and which are losing control.
True trend followers are not merely followers of technical indicators; they are keen interpreters of market narratives, careful observers of capital flows, and patient witnesses of market cycles.
