The Trend Is My Friend
As long as I traded against the trend, I kept losing. The moment I made friends with it, everything changed.
Hi, this is NorthRay.đź’Ş
There was a time when I opened trades simply because “the price is too high, it has to fall now” or “the price is too low, it has to rise now.”
I wasn’t paying attention to the trend. I was trading my feelings.
And do you know what happened?
During an uptrend, I would open Sell positions (because “it can’t keep going up forever”). The price kept rising. My losses kept growing. I held on, hoping for a reversal. Eventually, I either closed at a loss or got stopped out.
Then I read a phrase that every experienced trader repeats:
“The trend is your friend.”
I decided to test it. And surprisingly, once I started trading with the trend, my trades began closing in profit much more often. Not always, but noticeably more often.
Today I’ll explain what trends are, how to identify them, and why trading against them is like swimming upstream in a mountain river.
What Is a Trend? (The Simplest Explanation)A trend is the direction of price movement.
If the price is moving up, it’s an uptrend (bullish trend).
If the price is moving down, it’s a downtrend (bearish trend).
If the price is moving sideways within a range, it’s a sideways trend (range or consolidation).
Think of it this way:
Imagine you’re standing on an escalator.
An uptrend is an escalator moving upward. You can stand still and it will carry you up. You can walk up and get there faster. But if you try to walk down, you’ll struggle.
A downtrend is an escalator moving downward. Walking up is difficult and risky.
A sideways market is an...