This is a much heard saying among traders.
When you look at charts you will see that price often tends to move in a particular overall direction. You will recognize 3 directions:
- Upwards
- Downwards
- Sideways
The sideways trend is often cosidered not to be a trend at all, but this is wrong.
The sideways trend is the intermediate phase between up- and downtrends. It also comes as a pause or consolidation phase before a continuation in the same direction.
The price of a coin is based upon the collective decisions of all buyers and sellers. They base their decisions on all the available information. Price changes when new information enters the arena.
The trend can be identified using particular patterns, I teach you all about this in my Free Lesson about Trendlines. Feel free to check it out.
The Primary Trend, that is the larger timeframe trend, is usually crossed by shorter timeframe trends in the opposite direction, called retracements.
No matter what kind of trader you are, fundamental or technical, or both, the price chart is where the majority of traders look at most of the time.
Traders need to be patient in a downtrend or sideways market, sit it out, and enter when the reversal to an uptrend occurs. The trick is to buy as soon as possible, but not too soon. This is what an ideal trend reversal would look like:
The idea behind looking for trends came from the fact that is often very obvious to see them on price charts. Even the untrained eye has often no problem spotting the trend. Traders look for these patterns, because of the idea that when something moves in a specific direction, it often has a tendency to continue in that same direction. The first questions most traders ask themselves when looking at a chart are:
Is price trending? In what direction is it trending?
Some coins trend frequently, others behave more “choppy”, moving with big volatility around the average in a more unpredictable way. Some traders look only for higher/lower highs/ low to determine a trend, others look at the slope of a Moving Average and if price is above/ below it. More about this in my free lessons.
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