Trend Direction (Identification) Indicator

ℹ️ How to Identify Price Trends
Trend identification is a very important thing to do before a trader getting into a market. No matter it is forex, stock or other financial markets or even just conventional market, the very first thing a trader should do is figuring out what current trend is and where it will go in the future. For example, when a trader of mobile phones is successful to read that XXX phone series is booming, definitely he/she has a lot of it in his/her warehouse and if he/she is smart enough, a lot of money will come into his/her pocket.

The rule does work in financial markets, a trader or investor should be able to read and indentify the price trend of certain market instruments. A fiasco in doing such price trend identification is almost a guarantee that the trader or investor will have to enjoy a disappointment. It's very painful being trod on by a market. Even George Soros admits it in one of his books. On the contrary, a success in reading and riding a trend will make a trader smiles all the way to his/her bank.

However, actually it's quite easy to identify a price trend. We only have to pay attention on peaks and troughs of the price. Peak is simply the high or the top of price when it rises and trough is the low or the bottom. Both exist as a result of price fluctuation. As we all know that price doesn’t move straightly upward or downward. Price always fluctuates.

It's clear to see when price creates a series of higher-high and higher low, then it is an uptrend or bullish market. And when price makes a lower-high and lower-low in a row, we can call it a downtrend or bearish market.