Chapter 2. The Basic Principle of Technical Analysis—The Trend

Chapter Objectives

By the end of this chapter, you should be able to

• Define the term trend

• Explain why determining the trend is important to the technical analyst

• Distinguish between primary, secondary, short-term, and intraday trends

• Discuss some of the basic beliefs upon which technical analysis is built

Chapter Summary

How Does the Technical Analyst Make Money?

In order to make money using technical methods, remember:

• “The trend is your friend”—play the trend.

• Don’t lose—control risk.

• Manage your money—avoid ruin.

What Is a Trend?

A trend is a directional movement of prices. For a trend to be useful, it must remain in effect long enough to be identified and still ...

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