Trading Essentials - Trends

Hi everyone, I would like to share certain topics throughout this period which I hope will be helpful for new investors which can provide new insights as well. For more seasoned investors, do note that my sharings are based off how I learnt these concepts and might differ from terminologies you know. I tend to try and summarise/repackage into layman terms for the beginners to understand better.

The first topic I would like to share is on Trends. There are essentially 2 trends that stocks/investments follow and we'll be looking at price only.

An UPTREND is defined as HIGHER HIGHS and HIGHER LOWS such as the chart below, this is $Tesla (TSLA.US)$ Daily Chart (of which I have circled the higher highs and higher lows in red)

Likewise, the inverse can be said for a DOWNTREND, which is defined as LOWER HIGHS and LOWER LOWS

As a start, you can identify such trends and draw a trend line from the lows to the highs and watch as price respects that trend line. In the case of an uptrend, your stop loss should be set slightly below the previous higher low (to prevent wicking out) e.g. TSLA recent higher low on the 1hr chart is at around 251.95, my stop loss is thus set at around 251

I hope this mini sharing has helped you in managing your investments and do let me know if this has been helpful! Do vote below if you would like me to share more, or even comment below on what kinds of sharing you would like me to do. Have a great day everyone!