There are some building blocks that every trader needs to understand. These are your foundation to success. These concepts are important to understand and interpret price action. These key elements help you build a roadmap so that you do not get lost and just like a roadmap the more details you add the more successful your trip will be. These concepts have been divided into three classes ranging from charts to trendlines and support and resistance.
One of the most crucial ideas to deciphering the financial markets is that of the trend. A trend is a general movement in a particular direction. A market trend is a tendency for security prices to either move up or move down. Sometimes, they move sideways, but the big profits are usually made in either an uptrend, where successive price bars generally have higher highs and higher lows than previous bars, or a downtrend, where successive price bars have lower highs and lower lows than previous bars.
It is easier to make a profit in an uptrend or downtrend, and the profits are generally bigger but one should always understand that there are risks and that these are guidelines. Furthermore, it is obvious that if the market or security is trending, then support and resistance lines, by necessity, will also trend in the same direction. So, the first step to increasing trading profits is to recognize the trend and add a trendline to your charts. Trendlines follow a specific set of rules so that your trendline has validity. In this class we will learn step by step how to draw, apply and interpret a trendline.
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