Understanding and Using Stock Market Trends is a tool that allows individual investors to improve their market performance over a period of time, and will often lead to outsized gains. These can be difficult for a stock market beginner to understand at first, but more experience can lead to an investor being able to follow these trends and earn better returns as a result.
Understanding and Using Stock Market Trends involves both macro and micro trends. Micro trends are those that impact a specific stock or stock market sector. An example of this is a 50 day moving average which is the average stock price for a period of fifty days. When a stock breaks through this line, either to the upside or downside, this is called breaking through resistance. If a stock does not break through resistance, the stock will often fall back to norms, which often involves a retracement to a norm.
On the other side, are macro trends that impact the stock market in general. This often involves larger trends, such as depressions or recessions, as well as economic expansions. Understanding what part of the secular stock market trend we are in can lead to a better investment strategy.