Where have you heard about trend traders?

Who is a trend trader?

A trend trader looks for trends in the movement of an asset, and builds a trading strategy around that analysis, known as a trend following strategy. If a trend trader believes a security is in an upward trend, they will buy. Similarly, if they spot a downward trend, they would sell.

Trend traders use short, medium or a long term strategy. Regardless of the time frame chosen, traders will hold their position until they believe the trend has reversed. Note, reversal may occur at different times for each time frame.

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.