The Trend

The trend is the single most important component of any method. In fact it could basically be the only component of any very good method. But since I view markets in terms of an approach, There are three primary types of trends classified as direction of movement: an upward trend, a downward trend and a sideways trend or trading range. Remember, that the longer that the trend is in progress and the nearer you are to the end of the trend the more risk attends buying, or selling short on the corrections around the ½ way area. Your greatest profit potential and your least risk will occur when the stocks are preparing to leave the accumulation, or distribution areas or are very early in the trend, it is at this point where your profit risk ratio will be the greatest and you will be able to use liberal stops.