By Aspen Trading Group

If there is 1 bit of the trading mystery that remains a little unclear for traders it's the'trend'. Based on whom you talk to, each will have a distinct answer. No matter of their answer nonetheless, it's critical that you arrive in the right answer in the context of the way that person trades. Failure to properly identify the tendency will greatly lessen the odds of success. The first place to begin is identifying that time period you plan to make your trade from. For me, I just have three options, 60-minute, 240-minute or the daily chart, as these are the only three time frames I follow for transaction set-ups. The vast majority of the transactions are based on the 60-minute chart however. So, for the time being, let's keep it easy, I won't factor in the other time frames as it can find a bit confusing.

What's the trend on the following chart? https://www.cliqforex.com/trading-sy...g-gu-wave.html
In all fairness, it's a bit of a trick question. The answer, based on my egy, is that there is simply not enough information to make that call. Sure, the past several bars have been moving upward, but general prices are still trending lower.

Let's add one more piece of info to the chart. https://www.cliqforex.com/trading-sy...s-success.html
By adding a moving average, an individual can better examine the'current' trend. Remember, I am not terribly interested about what occurred a few hours before, but I am interested in what's occurred in the past 4-6 hours.

Without the moving average, it's almost impossible to accurately identify exactly what the current trend is.

Let's look at another instance. https://www.cliqforex.com/trading-sy...ps-2008-a.html
I suspect there were some readers who said”The trend is upward, I'll look to buy in to this pull-back.” But there is simply not enough information to draw conclusion presently. Let's add in the moving average. https://www.cliqforex.com/general-fo...shift-pst.html
If you did not properly identify the tendency, many will succumb to buying the pullback to support, or in this situation fib support -- this losing trade may easily have been avoided if you properly identified the tendency.

Needless to say, this trade would have flamed out badly.