In this lesson, we will discuss the core concept of trend in trading.

🧐 Think about what a trend is.
In trading, a trend refers to the main direction in which the price moves over a period of time. You can imagine a trend as the flow of a river—where the water goes, the price tends to follow.
🎈 Why is the trend important?
Following the trend is the key principle of trading.
As the saying goes, "The trend is your friend." If the market is rising, going long (buying) is more likely to be profitable; if the market is falling, going short (selling) may earn more. Trading against the trend not only is exhausting but also increases the risk of losses.
Helps you identify buy and sell points.
In an uptrend, buying on pullbacks is a smarter choice; in a downtrend, selling on rebounds is a better strategy.
Avoid ineffective trades.
During sideways consolidation, market volatility is low, and many beginners tend to trade frequently, which may only result in paying "fees." Recognizing the trend can help you avoid such ineffective trades.
📖 How to determine the trend direction
Judging the trend requires combining price movements and technical tools. Here are some common methods:
Observe highs and lows.
Uptrend: Higher highs and higher lows.
Downtrend: Lower highs and lower lows.
Sideways trend: Highs and lows fluctuate within the same range.
Use technical indicators.
Moving Averages (MA) for trend judgment.
Trendlines.
Draw a straight line connecting lows or highs on the candlestick chart and observe whether the price moves along this line.
🏷️ How to identify trend reversals
A trend reversal occurs when the market's price direction changes. Here are some common methods to identify reversals:
1. Reversal signals from candlestick patterns:
Head and Shoulders Top/Bottom
Double Top/Double Bottom (M/W shapes)
Single reversal candlestick
2. Reversal signals from technical indicators:
RSI divergence
MACD death cross / golden cross
Bollinger Band breakout
3. Breakthrough of key support/resistance levels:
Support level break during a pullback, shifting the trend from up to down.
Resistance level break during a pullback, shifting the trend from down to up.