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Beginners Guide to Trading the Trends

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Trends in trading

Hey, Traders, it’s Marina, The Trader Chick with, making of a day trader. And I’ve got a trick question for you guys. How many trends does the market show us? 

Are you ready to find out the real secret? All right, stick around, because I’m going to give it to you straight. 

How many trends does it take to truly work a market? Well, how many trends do we really know?

We know the downtrend. We know the uptrend. But do you guys know about the sideways trend? 

Because let me tell you, if you don’t know the sideways trend, this is where all your money is going to go. And understanding about markets and trading the trends that a market is in is part of the fundamental knowledge of trading principles and financial markets that you must have to become a successful trader.

Trading the Trends

So there are three very specific trends. We’ve got the really cool downtrend when the market is heading down, we’ve got the really great uptrend when everybody thinks that’s where we should be getting in.

We’re going to get into that a little bit more. Then we have the sideways movement. What do we do with that? 

And that’s the secret of keeping your money in the bank because I’ll tell you another secret, sideways area, that’s where the majority of traders end up losing money. And we don’t want that.

So, how do we discover trends? That’s what we will be discussing next and we get into the three trends and how to go about trading the trends.

Downtrends

So, for a downtrend, the market is going down.

We can see that the market is making lower lows, the pivots are lower. There are lower highs and it’s pretty obvious. We’ve got that downward trend. 

Another thing is, when we talk about downward trends, we actually think about shorting the market. So what is shorting the market? 

Shorting the market is when we want to get in on a trade that is going to take us lower. So basically, another way of saying it is that we’re selling. We want to sell. So that’s what shorting the market is. 

Whenever you hear people talk about shorting, that means that they are predicting, or they are saying that with all the evidence that they have in their hands, like reading the indicators, reading the signs of the market, it’s telling them that it’s going lower. So they get in to short the market.

So, if you guys don’t know what those signs are, if you don’t know how to read reversal patterns and just the basics, sign up for my free day trading mini-course and simplify your trading to find trading success.

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Another way of talking about a downtrend is what is referred to as a bear market. That’s when the market’s going down, the market is trending down. 

Next we will talk about identifying an uptrend.

But just a really quick little hack here, a little secret thing. Intraday traders or scalper’s like me (because I like to go in and out really quick) we actually make more money on the down market and then on the upmarket.

But just keep it between us.

Uptrend

Now for the uptrend. Well, we know that one right? Higher highs, higher lows you’ve got it, it just keeps on running. Or we hear people talking about I’m going to go long, I’m going long. 

Basically, you’re buying because the market is telling you that it’s about to go higher, and you want to buy low, sell high.

That’s pretty much going long means. Or you’re buying instead of selling. That’s pretty much what it is. It’s a buy. So when you say buy, it means you’re looking at an uptrend because you want to get in low and to sell high. So this is the uptrend.

Another way of referring to the uptrend is the bull market. When people talk bull, it’s pretty much something that’s going up.

Trends in day trading

And that’s what we know. So those are the two main trends. The downward trend – bear market going short.

Upward trend – bull market going high. 

trading the trends
An upward trend is when we see higher highs and higher lows – also called a bull market.

We could also have weak trends. But they could still go up or they could still go down. That doesn’t mean that there’s not a trend going on. It could be grinding and slow, but that still doesn’t mean anything. 

We can still look at it and if it has all our indicators and all our green lights in a row, I’d get in it, even if it does look kind of slow and grindy.

As long as it’s respecting my areas. But that’s a whole other topic. 

Do you guys want to know more about areas? I have an entire video called Respecting the Trading Areas. Check it out because it’s a really important video. 

All right, guys, what’s left? 

What is the third market that we need to watch like hawks and stay out entirely?

The Sideways Market

The sideways market. This is the trader’s worst enemy. This is where all your money gets taken. Why? 

Because it’s the indecision areas, the exhaustion area. It is the area that we just don’t know what’s gonna happen.

What do we know? All we know is that at the moment, here are the two areas. You’re seeing those two white triangles, right? One is a resistance area, one is a support area, and the market is just bouncing between those two areas.

As traders, we cannot predict what is going to happen. That is not our job. 

Our job is to read the language of the markets. And we have to know when we see a sideways market, that is a huge red traffic light telling us, stop, don’t go, stay in your car! Do not get out, do not spend any money, do not do anything. 

And if you’re already in a market that is sideways and got stuck in it, get out as quickly as you can. Take whatever you can, breakeven or even aim for a little bit of a loss, or a little bit of a profit. Because you can lose way too much money, and it’s simply not worth it.

Trading the Trends – How to Distinguish Sideways Markets

So how do we distinguish sideways markets, like I mentioned – areas, resistance area, support area when the market is bouncing between these two areas, and it’s really narrow, we want to stay back even more so. 

This is when we stay out. 

Sideways markets, bad, no bueno, we do not want to be near a sideways market. How do they look? Remember I mentioned, what are they? Transition areas, consolidation areas, and indecision areas. Here’s another version of it.

trading the trends - sideways trend
In this image we see a mini consolidation area. The market was heading up and then it comes into this consolidation area.

This is a mini consolidation area, right? The market is heading up. All of a sudden, it comes into this massive indecision area. We stay out until it breaks out and tells us exactly what it wants to do. 

We cannot beat the market. That is not our job. There’s no such thing as beating the market. That is such a misconception that people have to stop. They have to stop trying to beat the market. There’s no such thing.

You’ll never beat the market. 

However, you could read the market, and you could understand the market, and you could go in when the market tells you to go in. 

So remember, sideways markets – stay out. Know when you’re looking for the upward trend or the downward trend, and those are our friends.

You’ve got any questions? I am here to help you guys. All right, guys, any questions? And remember, if you don’t know what a support area is, what a resistance area is, you’ve got to learn your areas.

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