Trends occur across all different time frames, and it’s often said the earlier you spot a trend, the more opportunity you may have to capitalize on it. In that 100-year period, there have been numerous uptrends and downtrends some lasting years and even decades. Pull up a chart of the Dow Jones Industrial Average ($DJI) for the last 100 years and it’s easy to spot the overriding trend-up-but that’s not necessarily going to help you trade or manage your portfolio. The trend is your friend until the end when it bends.īut how do you find the trend in the first place?.Trend identification is so popular that there are many sayings related to trends, such as: Traders like to catch these changing prices hoping to ride them out, regardless of whether they’re short- or long-lived. And for good reason: Prices are constantly changing sometimes very quickly. Many traders, especially those using technical analysis in their trading, often focus on trends. Trend-following indicators can be used on their own or combined with other indicators.Get to know trend-following indicators by experimenting with different ones Three popular trend-following indicators are moving averages, moving average convergence divergence (MACD), and Parabolic SAR.
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