How many types of trends exist in the market: Definition, Types, Examples, and Uses in Trading

In the market, many new traders don’t know how to trade in the market with the help of trends, and many traders do not follow trends. because they are not aware of the market trend. If the market is not following the proper trends, you can’t earn a single dollar. Before taking any type of trade, we must know which type of trends are going on in the market.

If you have taken a trade without considering the trend, that trade may backfire. Due to this, you may have to suffer a lot of loss. The market has no emotions, it does not know who is going to trade, whether the trader has money or not. I have seen many such traders who do not do any kind of analysis in the market. They don’t check what kind of trend is going on and what side we have to place a trade on.

Many people do intraday trading on small time frames. That’s why they bear loss from the market. Because this type of trader does not check trends on higher time frames. You must consider trends in a short frame and higher time frames because the trend is our best friend.

Types of Trends

In the market, there are three types of trends are exist. Traders should always pay attention to all types of trends in the market. If there is an upward trend going on, then traders should make positions according to the trend. If we go against the trade, the probability of loss will increase significantly.

I have often seen people who go against the trend and do scalping trades, which sometimes leads to huge losses that they cannot even think of covering. If you also come across traders like them then be careful otherwise it can happen to you too.

There are three types of trends as follows =-

In this, we will understand each type of trend in depth. Whatever we can understand deeply, we can also do it easily. Learning about trends is crucial to every trader. if the trader doesn’t know about the trend then maybe be trader can lose his money.

Defination of uptrend=-

Before trading in the market, every trader needs to know about the trend. The uptrend represents the market continuously moving upside in a financial instrument, such as a stock, currency, cryptocurrency, or commodity over a specific period. According to the uptrend, traders can predict the market is overall in a bullish mood and it can rise more.

The market is performing consultative higher highs and higher lows In specific assets. On behalf of it, trader or investor show their interest in the buying side. They can make positions on the long side. If you don’t have proper knowledge of charts you must learn about them.

Most Traders often use various technical tools to analyze market trends and structures. With the help of traders can ensure the market will not give any kind of loss to traders because the trend is going on one way.

How to trade in Uptrend

Now come to know, how to trade in the uptrend. Trade in an uptrend is not hard, when the market is performing higher high and higher low, you have a good opportunity to enter a trade.

Ascending Trendlines – Trendlines play a main role in measuring the trendlines. Market give respects to trenlines. You can easily take a trade on it, by simple or traditional method. When the market is following an uptrend, and the market has performed two swing lows previously. Drow an ascending trendline that is contacting the last two lows, whenever the market performs the next swing low on the ascending trendline, you can enter and ride the trend for a long time.

On Last Swing high- The market sometimes does not touch the trendline regularly. You can enter on the last high. The last swing high pay a main role as an initial support. Or the market gives the respect to it very well.

Take Profit & Stop-loss – Traders are much time confused about how to set a stop loss on it. Stop loss or target is the most important part for every trader. If a trader doesn’t know how to exit the market with the help of taking profit and stop loss maybe he can lose his money.

Stop loss is Maine and a necessary part for every trader. If you don’t know where to put stop then you can put your stop loss as the last swing low. If you are doing trade on trend lines you can place the stop loss at the last touch of the trend line.

Making a profit is very important to raise the confidence of traders. If you are not booking your profit on time. You will be never a profitable trader because the market gives profit to him who is suitable according to the market. You can book a profit in an uptrend close to the last swing high. You can also place your take profit on the amusement of the overall last movement.

Example of Uptrend

With the help of an example, everyone learns too fast. If You just learned about the market, but don’t take a look at the example you lose some informatic things about the uptrend. Sometimes a trader is in a situation, where he does not know everything about the market. But when he understands the example, he understands almost everything.

As you can easily understand from the given example, the market is currently on trend and it’s continuously moving towards higher highs. If the market is moving in a trend, then traders can take trade very easily and earn a good profit. Once traders understand the secret behind the trend, we have one more work to do find an entry point where the stop loss is less and the probability of profit is too high

With the help of an example, if you want to take a trade-in uptrend, then always look at the higher low point of the market. As soon as the market later turns around and comes to the near previous higher high and makes a new higher low point close to the last higher high, then you can take the trade on that point without thinking. You have to consider the previous point as your stop loss, after that, you just sit and ride the trend.

Definition of Downtrend

In a downtrend, the market moves come from top to bottom. In a downside trend, the market makes lower high and lower low series in a particular security, cryptocurrency, and in a forex market. In the downturn, the overall market moves from upside to downside. Also, the price of assets is moving down according to trends.

In the downtrend, the seller is heavy on buyers, in the other hand the buyer is booking their profit and loss in the downside market. Traders can analyze trends with serval indicators.

A downtrend can occur in different markets like the stock market, forex, currencies, and others. if traders can’t recognize the trend well, it can affect the decision-making process of the traders. A downtrend helps traders to make a short sale and adjust their investment according to the trend.

How to trade in a downtrend

After identifying a trend, it is very important to trade. If we don’t practice after knowing the trend, then perhaps we will not be able to become a good trader. In the market, the trend is our friend. It’s out our friend we can’t move a single setup to profitable trading.

In the downtrend, the market moved downside performing lower highs and lower lows. Traders can place the the trade on sell-side according to market follow. The market whenever rebounds from the last swing lower low, you can place a sell order on a lower high. But be careful, while the market is moving back from the last low, you must check if the market has a resistance or pullback zone.

On Descending Trendline – A trendline plays a main role in measuring a trend. If the market is moving to the downside by touching the trendline. It means the market is allowing traders to take a sell-side trade. If you have a bit of knowledge about the trendline, you can sell at the third touch of the trendline.

Entry on of the trendline is quite safe. Because on the trending trader have a small stop loss and big profit. We are also placing a trade on it. We wait for the market to come close to the trendline, whenever the market comes to the trendline just execute the trade and sit back until your target hits.

On Pullback – It means the market has done the rally in past market momentum. Unfortunately, we missed that entry, and now we are looking for the next entry to take the trade. We want to tell you that trade on a pullback is risky. Because if you don’t have any kind of grip on chart pattern or market structure. Maybe you lose your capital on this trade.

If you know how to trade on pullback then it’s work for you as a bar of pure gold. Trade on this chart pattern gives you a small stop loss and a huge reward. Because it was formed in a place from where the market has faced support, and support has changed into resistance.

Moving Averages – Moving averages inform us about the trend. Many traders use it to take entry into it. We have seen many traders use ema 20 for daily trade. Because of it traders can predict the market reached its low and facing support of ema’s, and it’s a good entry point to take the trade.

Take Profit and stop loss – Taking profit is essential to it. If you don’t make a profit regularly maybe you lose your interest or confidence in the market. Profit booking helps to grow a trader. Till now we have to book profit regularly so that’s why we are growing much more.

According to trends, you have to place to book your profit. The first one is on Support and the second one is according to trend. Let’s talk about how you can book profit on support, the market is following the downside and you are still in the trade. The market is struggling to break, down and retest the same price again and again. You can can book your profit there. Secondly, you can book your profit on a new low according to the market trend.

You can use Fibonacci to measure the next retracement level in the market. From the level of Fibonacci, you can take entry on the rebound level and ride it to the next level of Fibonacci. The market follows in lower low and lower high form. If you sell at a lower high and book profit to a new lower low. You will be a pro trader in the market.

Stop loss is an important part of trading. You will never become a trader if you are doing trade without stop loss. Because the market will wipe your account sometimes. Stop is your enemy and your friend also. How it’s enemy, the enemy is you are doing trade and the market hit your stop loss and rebound from hitting your stop loss.

Stop loss is your friend, if you doing trade and market hit your stop loss and call too much downside. It means you are safe and your capital safe. So one put a stop before entering the trade.

Let’s learn about how to place a stop loss in the market. You can set stop loss according to the market movement. In our view, you can place your stop loss on the last swing high. Secondly, you can also put your stop loss on a chart pattern high with bit buffering.

Spouse, you are trading on a shooting star chart pattern. Trade is going on your side, you want to set stop loss on the shooting star chart pattern. First of all, you must check, what is the location of the formation of the shooting star. If the chart pattern is formed in the right place you can set your stop loss on high of shooting start with a little bit of buffering.

Buffering is too important sometimes the market goes up and hits your stop loss and moves back on your entry price. If you stop loss with buffering you can feel safer.

Example of downtrend –

Trends in the market are essential for learning to trade. Without knowledge of trends, traders can’t earn a single cent from the market. If you can trade in the market according to market trends, the market is not for you. We are going to learn something new with the help of the example,

In this example, you can see clearly. The market is moving downside with performing lower low and lower high. Traders can take trade according to the market movement. If the trend rebounds from a new low then the trader should wait for the pullback and trendline.

If you place your trade on the pullback or close to the trendline then you have a small stop loss or big reward. Because the market is following in the trend. After facing the resistance, the market is likely to fall back to the downside.

What is Sideways trend =-

In the sideways trend, the market moves in a horizontal shape. It’s also known as a sideways market. In this type of market trend, there is no trend. The market perfrom high close to the last high and low close to the last low.

In any asset, there is no rising and decreasing the price while the market is moving narrow range in a certain period. In this type of trend, the high or low of assets isn’t clear to the trader direction of the market, and the price moves into the specific price range.

Traders can use technical tools to analyse the market’s overall trends. The sideways trend is easy to analyse because this trend has sharp up and down movement, the market has performed high and low in particular ranges. During the sideways trend, traders have challenges in trade, strategy testing, and decision-making.

How to trade in a sideways market =-

Every trader is facing the problem, of how to trade in a choppy market. In this type of market movement, the market has no direction to move. That’s why the trade isn’t a clear trade on behalf of this type of trend. It is a bit complicated trade like in a trendy market. In a trendy market, traders can predict the next movement of the market. But in sideways market traders can’t predict the movement of the market.

First of all, traders should find the market range. At what price the market is performing higher high or lower low? After finding the range, the trader should sell at the top of the range price and buy back at the bottom of the range. While trading in a sideways market you must have a proper and strict stop loss or profit book target in advance.

In the Second way, traders can trade on the breakdown or breakout of the market’s sideways trend. It is quite risky to trade in the first breakout or breakdown of the market. Traer should trade on a retest of the market trend. Trading on retest is not risky to traders, because on this level the market faces the resistance or support of the last range.

In one more way trader should wait for the confirmation. If you are not waiting until your desired setup is fulfilled. You may lose your money in the market.

Example Of the sideways market

With the help of examples. We can make our trading easy. After reading we can observe examples that will help to achieve more knowledge. In the market, many of the traders do not follow the example of the trends. The trends play a main role in taking trade. So we are going to share the proper example of the sideways market trend.

In this example, you can see. The market has not trended it’s still moving in a sideways market. If in the market there are no any kind of trends available, then traders must keep away because without direction trade brings losses.

In this pic can you observe what kind of trend is going on? In our view, the market is still moving in a range. So that’s why traders must away from this type of trend.