In order to constantly keep abreast of events in the financial market, as well as to predict changes in these events, it is necessary to be able to track financial trends. A competent analysis of the market allows you to predict changes in the ratio of supply and demand, and in many other aspects of financial activity, and this can be of significant assistance to investors and businessmen.
Instructions
Step 1
To assess market trends, you need to monitor the falls and rises of the market, as well as their uniform horizontal movement, indicating intermediate periods, a kind of pauses that are important for further market movements. It is the direction of the market movement that is called a trend, and trends are subdivided into major, secondary and short-term.
Step 2
If the main trend has a period from six months to several years, and the long-term trend is most often taken into account by financial analysts, then the secondary trend lasts one to six months, and it is no less important, since it corrects the main one. The short-term trend corrects the average trend and is important to traders, not investors.
Step 3
The best method for studying market trends is to plot a simple trend line. Use the trendline to determine the slope of the trend, its ascending and descending lines. Draw an upward line below successively rising retracement lows, and a downward line above successively falling market peaks.
Step 4
Set two points for each line through which it will pass.
Step 5
Test the trend line as often as possible on the real state of the market so that it becomes more significant and effective, and its results are as close as possible to the real state of affairs.
Step 6
Draw several lines on the charts - in some cases, some lines are false, and therefore it is necessary to draw new ones over and over again to determine short-term and long-term trends.
