What is a trend trader?
A trend trader looks for trends in the movement of an asset, and builds a strategy around that analysis. If a trend trader feels a security is in an upward trend, they will buy. Similarly, if they spot a downward trend, they would sell.
Trend trading can be both a short and long term strategy, but for both strategies, one point remains the same; a trend trader will always see the trend out and stay in their position until a trend reverses
Where have you heard about trend traders?
At the core of trend trading are the indicators that traders use to measure and spot a trend, some of which you may have heard of. Some of the most common examples are moving averages, Relative Strength Index (RSI) and On Balance Volume.
What you need to know about trend traders...
When a market has consistently higher highs, it's in an uptrend - also known as a long position - and a trend trader may look to buy. If it has consistently lower lows, it's in a downtrend - or short position - a trend trader may plan to sell.
Trend traders use different methods to try and spot trends, from moving averages to monitoring Relative Strength Index. Whatever the method, the goal is the same - see the trend out. Trend trading can be a short-term or long-term strategy (taking anything from a few months to 3 years), but once the trend has been spotted, a trend trader will stick with it until it reverses.
As with all trading strategies, trading a trend isn't a guarantee for success.