Trend Trading

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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).

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
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  2. Short (or Short Position)

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  3. Trend

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

    A change in the direction of a price trend. On a price chart, ...
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