Identify if a market is trending or ranging
A Trending Market
There are two types of trends, the downtrend, and the uptrend. In the financial market, up trends occur when we are in a bullish market, and downtrends occur when we are in a bearish market.
In a downtrend, the market begins to make lower lows and higher lows. the price keeps falling despite the occasional pullbacks.
Don’t be deceived into thinking the occasional pullbacks are actually the beginning of a reversal of the trend.
Mental note to self: Never ever place a buy order, in a market that is sinking or in a downtrend.
Take a minute, let that sink in for a bit.
An uptrend is the exact opposite of a downtrend, the market keep’s making higher highs, and higher lows when the market is trending up or in other words bullish.
In a bullish market, it is often a smart idea to place only buy order’s while ignoring the often tempting sell opportunities that present.