Finding the trend of a stock can be an important factor before doing trading or investing in that stock….🌺
If you don’t know how to find the trend of a stock then this post is for you because through this post, I am going to share 6 easy and accurate ways through which you can find the trend of any stock, any indices or any other script which is traded in stock market…..
So, without further delay, let’s start this post….⤵️⤵️
Two Things To Remember Before Finding Trend
Before finding trend of a stock or any index, you need to remember two things because if you don’t take care of these two things then you will end up losing money:⤵️
Chart Time Frame
If you want to find trend of a stock for swing trading then keep the chart time frame 1 day or 1 week, and for investing keep chart time frame 1 week or 1 month…🌺
For day trading, you can keep time frame as per your wish but most preferable are 3 mins & 5 mins….
Purpose of These Strategies
The purpose of the strategies given below is only to find the trend of any stock or any indices, do not take trade based on that because these strategies are just to find the trend not the direction of a stock…👍🌺
The strategies which are used to predict the direction of a stock are other strategies, which I will talk in any other post…
Ways to find the trend of a stock are as follows…⤵️
1. By Using EMA’s
In this strategy, you need to use two exponential moving average, one with lower period and other one with higher period…
In the above example, I have used 9 and 15 EMA and you should always use EMA for better accuracy…
The strategy is very simple, if the 9 EMA crosses the 15 EMA in downward direction then the stock has entered in downward trend and if it continues to move down then we can say the stock is in downward [as shown in the above image with Red Arrow]…🌺
And if the 9 EMA crosses the 15 EMA in upward direction then it means that the stock has entered in uptrend and if continue to move up then we can say that the stock is in uptrend [as shown in the above image with Green Arrow]….🌺
Using Single EMA
To find the trend of a stock, you can also use a single ema but with higher time frame…
I use 40 EMA and the strategy is, if a stock is trading above the 40 EMA then the stock is in uptrend and if it’s trading below 40 EMA then it is in downtrend…🌺
2. By Checking The Monthly Return of A Stock
Yes, by checking the monthly return of a stock, you can easily find the trend of a stock and the rules of the strategy is very simple and as follows:⤵️
If a stock is continuously giving positive returns from past many months then it means that the stock is in uptrend…
And if it’s returns are decreasing on monthly but still positive then it means that this stock is in uptrend buy either it’s consolidating or soon it can enter in a downtrend and if start giving negative returns then it means trend has changed and this stock has entered in a downtrend…🌺
But if a stock is giving continuously negative returns from last many months then it means that this stock is in downtrend…🌺
And if the return of this stock are increasing on monthly basis but still negative then it means that either this stock is consolidating or soon it can enter in an uptrend and if the return starts to become positive then it means this stock has entered in an uptrend….🌺
3. By Using Alligator Indicator
According to this strategy, if the stock is trading above jaw line then the stock is in uptrend and if it is trading below jaw line then the stock is in downtrend….🌺
Usually there are three lines in alligator indicator but in this strategy you need to use only jaw line, and disappear the others….
To disappear other line just go to alligator indicator setting> style > untick teeth & lips option….👍
4. By Using MACD
Usually, MACD is used in day trading but you can also use it to find the trend of a stock…🌺
Setting you need to use: Fast Length: 45, Slow length: 46 & Signal Smoothing: 19 and for better accuracy use ema in MACD indicator….
The strategy is very simple and is as follows:⤵️
if the fast length line crosses the slow length line in downward direction then it means the stock has entered in a downtrend, And if the fast length line crosses the slow length in upward direction then it means the stock has entered in uptrend….🌺
5. By Using Trendline
Trendline is the most common way to find the trend of a stock…🌺
To draw trendline, you just need to zoom out the chart so that you can see a bigger and clear picture which can help you to determine which trendline you need to draw i.e upward trendline & downward trendline….
Whether it’s an upward trendline or downward trendline, it’s very important that the stock touches the trendline atleast three times then only it will be considered a true trendline….🌺
If it’s an upward trendline then the stock is in uptrend and the trendline will work as a support, if it breaks the trendline line then it is meant that the stock has gone in a downtrend…
But if it’s a downward trendline then the stock is in downtrend and the trendline will work as a resistance, if it breaks the trendline in upward direction then it is meant that the stock has gone in a uptrend….🌺
6. Using Bollinger Bands
Last but not the least, like we did in alligator, you need to disappear upper and lower line of the Bollinger Bands by going to indicator setting > style > untick upper and lower option.🌺
Now, there will be only middle line(basis) left on the chart which will tell us about the stock trend….
The strategy is, if the stock is trading above the middle line then it means that the stock is in uptrend and if the stock is trading below the middle line then it means that the stock is in down trend….🌺
Imp: This middle line of BB can act as a support and resistance…
So, Which is The Best Way To Find The Trend
I personally use 9 & 15 ema combination to find trend and it’s the best way to find the trend for day trading, swing trading and investing….🌺
So, these were the six simple and easy ways through which you can find the trend of a stock or any index in just a minute…
If you liked my post, then do share it on your social media handles….👍
Will see you again in next post, til that take care, stay ahead, and stay profitable….
Bye and peace….👍🌺