"What is the overall stock market trend?" Have you heard people asking you about this? Do you know how to answer this question? If you are a serious traders or investors who like to make money in the stock market.
Van K.
Tharp, author of Trade Your Way to Financial Freedom,  said that "Every trader needs a trend to make money".
So, you must really know how to read and study the stock market trends.
This is the first step you must take to be successful in the stock market.
Now, what is a trend? Trend means the general direction of the price movement of a security.
The security can be a stock or stock market indices, or even forex.
You will generally need to plot the security price on a chart in order to read the trend much clearer.
In simple words, if you look at the stock price chart, the trend is UP if the price is consistently going up.
On the other hand, the trend is DOWN if you see the stock price is consistently moving downward.
A trend is called a consistent trend only if you see the same pattern or trend keep repeating time after time.
Both you and me know that it is totally impossible to see the stock price going up or down in a straight line.
There bounds to have up and down interchangeably.
For example, you will see an up trending price for a few days, then, the stock price may take a pause or may correct downward for a few days before resuming the uptrend again.
In a consistent up trending market, you will see a price keep breaking new high that is higher than previous high.
Similarly, the low will also be higher than previous low.
On the other hand, in a consistent down trending market, you will see a price keep breaking new low that is lower than previous low with high lower than previous high.
There is one more scenario that if you see the high is about the same level as previous high with low about the same level as previous low.
Then, the market is oscillating up and down in a sideway market and not trending market.
If you are really serious about making money in the stock market, you must remember this definition of uptrend, downtrend and sideway market by hard.
Recognizing the stock market trends is your first step towards successful stock market trading.
After recognizing whether the market is in the uptrend, downtrend or sideway market, you can subsequently apply the appropriate trading system to either buy low sell high or sell high buy low to make money in the stock market.
Remember, "Trend is your friend, it will bite you if you ignore it".