Trend Trading


DEFINITION of 'Trend Trading'

A trading strategy that attempts to capture gains through the analysis of an asset's momentum in a particular direction. The trend trader enters into a long position when a stock is trending upward (successively higher highs). Conversely, a short position is taken when the stock is in a down trend (successively lower highs).

BREAKING DOWN 'Trend Trading'

This strategy assumes that the present direction of the stock will continue into the future. It can be used by short-, intermediate- or long-term traders. Regardless of their chosen time frame, traders will remain in their position until they believe the trend has reversed - but reversal may occur at different times for each time frame.

  1. Countertrend Trading

    A type of swing-trading strategy that assumes a current trading ...
  2. Trend

    The general direction of a market or of the price of an asset. ...
  3. Reversal

    A change in the direction of a price trend. On a price chart, ...
  4. Long (or Long Position)

    1. The buying of a security such as a stock, commodity or currency, ...
  5. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  6. Asset

    1. A resource with economic value that an individual, corporation ...
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