Strategy 3

Charts help you to understand the direction an asset price is going or might go over time. Recognizing a trend will help you to make better decisions and profitable trades. It will help you to determine whether you should go for “long” (trend line goes up) or “short” (trend line goes down). While trading you come across the following trend lines.

Upward Trend

An upward trend indicates that the price of an asset is increasing.

Horizontal trend

A horizontal trend indicates very little movement in the asset’s price. While peaks occur, the overall progress is linear. A horizontal trend is less interesting for a trader since it may be difficult to identify which direction it will go.

Downward trend

A downtrend occurs when the price of the asset decreases. By recognizing a downtrend early on, you can make more accurate decisions. Downtrends are a good time to go “short”.