The concept of trend trading stems from the idea that the best way to trade the markets is through the understanding of the constant that is the markets participants.

It is vital that you understand the logical basis for this approach, so you can firmly appreciate how hard it is to do and so you can summon the inner strength to follow these techniques during difficult times. Without this understanding there is no way anyone could consistently apply these techniques.

Hence trend trading attempts to understand and benefit from human nature and feelings in specific instances.

It is this act of people voting with their opinions that moves markets.

This type of human behaviour is somewhat easier to interpret than others as we notice a collective commonality of the madness of the crowd or ‘herd mentality’.

How Does a Trend Happen?

A trend simply reflects some alteration [perceived or genuine] to the supply and demand dynamic from that which was previously factored into the price as it was previously thought it would exist and the market must adjust to reflect this new outlook. [Simply put — the underlying factors affecting price considerations have changed hence the market price must adjust accordingly]

When all is normal in the world prices tend to stay in a sideways band. Every now and then supply or demand changes and that is what a trend is, it is the market adjusting to its new fair price and equilibrium. This of course is a meeting of the minds of buyers and sellers, so price must travel to this new equilibrium, by consensus i.e. there is akin to negotiation in price as participants trade with one another at satisfactory rates.

The result is that in upward trending market buyers offer higher prices and sellers may delay somewhat in accepting those prices hence the prices rise. Also with an overabundance of buyers they will place sequentially higher orders to buy to ‘lure’ sellers to part. The seller will then choose to accept the highest prices and at that point the market price has moved up to that new level.

When the price reaches its new supply and demand equilibrium the price stops trending and begins to go sideways [i.e. remains relatively flat] and typically will remain that way until the relationship of supply and demand changes again, which it inevitably will at some stage.

As a result of the very fact that circumstances change trends are bound to occur so the choice is whether to try to ‘beat’ scores of fundamentalists in large institutions studying those changing factors or to simply accept their decisions with regard to price and trade in favour of capital flow. It is this latter approach that we endorse. Education in the former is too laborious, subjective and specialist for most new traders.

Fundamental Analysis

is the evaluating of a market to measure its actual value, by examining related financial, political and other economic factors. Fundamental analysis studies anything that can affect the markets value. The end goal of it is to produce a point of view that an investor can use in the decision making process.

for example in cryptocurrency — fundamental analysis determines the health and performance of an underlying currency/coin by looking at key numbers and economic indicators, such as adoption rate. The purpose is to identify fundamentally strong indications at the projected growth/decline and usage in order to gauge a sense of potential direction in value. Investors go long on the Crypto’s that are strong, and short the Crypto’s that are weak.

Fundamental analysis uses real, public data in the evaluation. Although most analysts use fundamental analysis to value stocks, this method of analysis can be used for just about any type of financial market.

Technical Analysis

is the forecasting of future price movements based on an analysis and examination of past price movements. Like weather forecasting, technical analysis does not result in absolute predictions about the future. Instead, technical analysis can help investors anticipate what is likely to happen to prices over time, based on the potential of history repeating itself, or the use of self-fulfilling prophecies. Technical analysis uses a wide variety of charts that show price over time.

Technical analysis is applicable to Cryptocurrency, Forex, commodities, stocks or any tradable instrument where the price is influenced by the forces of supply and demand. Price refers to any combination of the open, high, low, close, volume, or open interest for a given market over a specific timeframe. The timeframe can be based on intraday (1-minute, 5-minutes, 10-minutes, 15-minutes, 30-minutes or hourly), daily, weekly or monthly price data and last a few hours or many years.

Generally
In my opinion, technical analysis is more useful than fundamental analysis and deserves more focus, but the two should be combined

what we mean by Buying the market. A candlestick shows the same thing as an OHLC bar but there is just a rectangular box drawn out between the open and close and I’m sure you will agree that it’s a lot more visually pleasing to look at when comparing the two.
when we buy, we don’t just buy for the duration of one bar only, we might end up holding a trade over a couple of bars. If the market has been moving upwards over a period of time, then that means (on average) there have been more bars closing higher than where they initially open. When you make a buying decision, you are speculating that the market will continue to move upwards from your entry level to your Take Profit level (where you will exit the trade with a profit). However, if the market had to move downward for long enough and reach your Stop
Loss level then your trade will close in a loss
the same concept defines the nature of selling in the market just visa versa. If the market has been moving downward over a period of time that would mean there has been a collection of bars that have closed lower than where they initially opened. When you make a selling decision, you would be doing so based on a speculative view that they market is going to continue moving down between your entry level and lower towards your Take Profit level where you would exit the trade in profit. Once again, if the inverse had to occur and the market moved upwards instead and had to reach your Stop Loss level then you would lose the trade

• Fundamental analysis is generally the practice of evaluating the value of an asset and analysing the factors that could influence its price in the future. The factors are what really matters because that’s what actually defines this methodology so lets have a look at some of the factors.
• Certain events like a counties increase in the unemployment rates or a country’s economy and monetary policy statements affect the level of demand for its currency.
• If a country’s current or future economic outlook is good, their currency should strengthen and that’s where this concept would be derived from.
• The better shape a country’s economy is, the more foreign businesses and investors will invest in that country.
• Company reports Are taken into consideration by investors who have interest in purchasing an amount of stock in a business. Because the value of the investor’s shares will only increase if the underlying value of the shares increase, one must be confident in the company’s potential growth and this is certainly something that a companies report can paint a clear picture on.
• Media Influences! Whether or not you read the newspaper, watch the news on television, follow news of social media or listen to news on the radio im sure at some point in time you have been exposed to news that was representative of true coverage and/or news reports that were blatantly manipulative of the facts. The news can influence trading and investing decisions to a significant degree.
• When using the media as a source of data and information one needs to be sure of the source’s reliability.
• Environmental Influences are the major influences to the supply and demand of (but not limited to) agricultural commodities. If a country experiences drought there are countless ways that would affect production. We would mainly see the rise in prices of fruit, vegetables and grains from a country that is generally rich in production of these
• commodities if it had to go through a drought which also inevitably affects trading decisions and market conditions for the commodity.