It is part of human nature to want to feel like we accepted, and a welcome member of something larger than ourselves. If you're relatively new to the stock market trading game, you've probably heard people say things like "the trend is your friend," or "never go against the trend," without really knowing what they meant. Although the stock market is a very dynamic place, with prices constantly moving up and down all the time, it's important for all new investors to realize that prices don't just increase or decrease arbitrarily: what you're looking at is the manifestation of the market trend.

Outside the stock market, trends don't always make much sense, especially if you're talking about fashion or music trends. Thankfully, the stock market trend is usually motivated by much more logical principles of economics and mathematics, although public opinion and emotionalism can still act as interruption some of the time. Basically, trends in the stock market are defined as the overall direction in which prices are observed to be moving, either up, down, or neutral (flat). If you've been studying up on the practice of technical analysis, you'll know that trends are very important for predicting the future movements of stock prices before they happen.

It's important for new investors to realize that the market trend is one of the most important things they can learn to identify on stock market charts. In order to confirm that a trend is upward moving, you have to be able to point out at least two low points on the chart, and the second low point must be charted at a point that is higher than the first. Conversely, a downward trend can be confirmed by looking for successive high points, each of which closes lower than the previous one.

Of course, you won't have to spend much time looking at stock charts to realize that the market trend doesn't always take a completely positive or completely negative slope throughout the day, week, or month. There are smaller trends that form within the larger trends, which can sometimes appear like pauses or even retracements in the larger trend. These internal trends are classified as intermediate, short-term or long-term, depending on where they are positioned inside the larger trend. Becoming skilled at spotting and identifying trends is an important skill for a trader, because it can prevent them from making premature sales, or early purchases.