What is the trend?

I tried to use the search function, but a search for "trend" turned up a ton of results, believe it or not.

My question is how do you know what the trend is? Take EUR/USD for example. Depending on which chart you look at, the trend could be up OR down.

I want the trend to be my friend, but I don't know what the trend is!! Help!

These are the charts I was looking at:
1month
3month
YTD
6month
1year
2years
5years
max

Also, in case anyone is worried, I haven't opened an account yet. I'm trying to gain as much information as I can from this site and babypips.com before I open a demo account. This question is just part of my information-gathering.

Thank you.

Congratulations! You're not an idiot!

That may come across as sarcastic but I'm dead serious. You have no idea how refreshing it is to see your post. Your ignorant, but you know it, that's half the battle! You've shown much more intelligence than most (myself included).

You are indeed correct, looking at different time frames will give you different answers to "what's the trend?"

A general rule is to look at the large time frames, for a general trend direction, and then trade in this direction on a lower time frame if the trends agree.

For example, if the daily trend is up, then you can look at hourly charts, and if they are also up, then it's generally a good time to look for long trades. You are much more likely to catch bigger moves trading with the trend.

However, it is perfectly feasible to trade against the trend on larger time frames. If you are only looking for a few pips, what happens on the larger time frame doesn't matter as much.

If you're on a lilo in the surf at the beach, over the next few minutes, it doesn't matter if the tide is going in or out, you're going to be in roughly the same place, however if you're going to be out there for hours you might want to check it's coming in before having a kip .

Short and direct

I tend to look at, at least the next 2 higher timeframes from where I am at, so if I want to trade the 15 min chart, I check the 1 hour & 4 hour charts for trend information.
Trading the hourly, look at least at the 4 hourly & Daily trend.

I like to think that the larger timeframes as players with more at stake than I have and that they will be doing the same as I am, looking at TF's higher than me to trade.

You need patience to trade the trend, especially if market is retracing.

MT4 has a really good tool called regression channel, you will need to add this to your toolbar. I will try & explain how I use this in another post.

One thing you can do is zoom out. This gives you more history and a better picture of where the price has been. You are still on the same time frame and so you are getting a picture of the trend on the time frame you are viewing. As you are clearly aware, this is important.

Zooming out also has the effect of highlighting support and resistance zones, so that you can plan a trade accordingly. Thank mbqb11 for this advice. He mostly posts on the James16 chart thread. He's usually right, dammit.

Lots of good information here.

I went through this dilemma when I first started out. How do you determine a trend when each time frame shows something different???

Here is my way of handling it which is just another way of stating here what's already been mentioned. Sometimes hearing the same thing but slightly differently rings a bell ;-)

You need to determine a time frame that is suitable for trading. If you are looking to day trade it will be the lower TF's 5min 15min etc. Then use the higher timeframes to gain perspective as to what the general direction of the trend is. This is important because if you are looking at the EUR/USD and the over all trend on the daily is down you are going to want to know if you are in the middle of a rally (pullback) or if you are in a continuation of the major trend when making your trading decisions on your chosen TF.

I personally use the higher TF's for general trend direcction and key areas of support and resistance. I mark them so when I am on the lower TF's they are visible when price approaches those areas.

I then drop down the the lower TF (15min) and trade the trend direction shown on that TF. But I do so with the knowledge of what the overall trend direction is based on the daily so I know if I am in the middle of a pullback or a continuation and I watch as price appraches those hey areas of support and resistance.

One key thing to consider when determining support and resistance areas is:

Don't look to hard for them. Chances are if you aren't seeing it nobody else is either.

Keep it simple try not to over complicate the issue. Trends exist within trends and it will always be that way. What's important is that you choose a side (bullish/bearish) based on your analysis. If you can't determine which direction it's going stand aside the market is probably ranging.

Good luck to you :-)

Determining a trend can be somewhat simple:

A Downtrend is characterized by Lower lows and Lower highs

An Uptrend is characterized by Higher lows and Higher highs

Now to define highs and lows:

High: when price goes up, it eventually has to come down, the point of inflection (where price changes direction from up to down) is the high.

Low: when price goes down, it eventually has to come up, the point of inflection (where price changes direction from down to up) is the low.

Resistance: a line at a certain price (usually a high) that price will have trouble going above it and is likely to bounce back down.

Support: a line at a certain price (usually a low) that price will have trouble going below it and is likely to bounce back up.

Trendline: a line that connects the highs or lows of a given trend. Upper trendline connects highs while lower trendline connects lows.

With all this said, a downtrend will have trouble breaking the upper trendline as price is heading down. And in the same fashion an uptrend will have trouble breaking the lower trendline since price is moving up.

The definition of trendlines always seemed too restrictive. Connect repeating or single chart patterns other than several pivots high or low.
Already noted is that better trendlines are on higher TF's; also, select candles there can also find within them on lower TF's effective patterns.

A trend must have a reason to go from one place to another, and TL's can provide that reason.

When trader trades with trend, the trend will end.
If the trader goes against trend, the trend will continue.
This proverb has much of sense.