Being a trader is about building a depth of knowledge and a reservoir of data that you can effortlessly tap into. And in the pursuit, one of the most important aspects is to keep up with all the market trends.
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But this industry changes constantly; something happens every second of the day. So, to become successful in this profession, you need to plan short-term and long-term possibilities and targets.
Market trends are fluctuations due to a change in consumer behavior and habits. If you can identify a consistent trend that’s surging through, you can also be a part of the profit.
Keeping a close eye on these trends will affect your performance directly. So, you need to set up a shop to observe them. Many trend indicators help analyze whether it will go on or face reversal.
You’ll need effective risk management policies and a good grasp of trading psychology.
Here are a few ways that you can up your game, exercise better control, and keep track of all the market trends:
Analytics and digital tools
If you’re someone that loves stats and numbers, then the good news is that there’s an impressive variety of tools to analyze market trends ready at your disposal. And if you’re not, you should learn about them to achieve better results.
These tools can help you look at the bigger picture and, simultaneously, let you know minute changes taking place in the marketplace. And all of this gets done far quicker than you’d assume.
You can use website archiving tools like Stillio to store valuable data safely without losing them. For example, you can stumble upon or discover through research the trends that are getting searched online by more and more customers. A good tool for that would be Google Trends, which shows various niche trends.
You can also use Google Keyword Planner, which can inform you of the most famous keywords used by a specific demographic.
Moving Average is one of the most used trend indicators. It makes price data much easier to comprehend by creating an average of those prices. In any price chat, the flat line that shows the moving average lessens variations caused by random fluctuations in price.
You can get an average of any stipulated time period- one day, one week, or an hour, anything you choose. If you want something more long-term, there are options for 100 days or 500 days.
Moving Average can function in various ways: it moves sideways if the price keeps ranging, and it goes up when there’s an uptrend. But remember that this only tells you about the prices; it has no power to predict how a stock will go in the future.
Another helpful trend analysis tool is Supertrend. It indicates a possible direction of the price based on the trends.
Generally, a super trend is marked just above the closing price of a stock or just below it. The indicator changes color according to the direction it would go as per its calculation.
If the super trend goes green, it’s the buy signal, as it closed below. And if it closes above, it’ll show a sell signal colored red.
Highs and Lows
Highs and lows are the most commonly used tools to analyze trends.
If there’s an uptrend going on and the majority of the market is looking to buy it, the price creates ‘higher highs.’ It also shows buyers buying at previous dips through the ‘higher low.’ But if the price falls below the higher low, then it’s no more an uptrend.
Similarly, if the prices keep falling in a downtrend, you get the latest’ lower low’ and all the ‘lower highs.’ In this case, the majority sides with the sellers. And when the price goes above the last lower high, it signals a trend reversal.
They say, ‘the trend is your friend, and it’s correct. If you can keep a keen eye on the market trends, it’s bound to become a greater profit. It’s the most effective way to become the trader you always wanted to be.