CHAPTER THREE TRENDS AND TREND LINES. Note. I shall be referring to Volume and Spread Analysis often in this section and so shall use the acronym V SA throughout. We have indicated already that if you are going to become a good trader, which then leads to making money in the stock market, you must trade with the consensus of professional opinion and not against it. | CHAPTER THREE TRENDS AND TREND LINES Note. I shall be referring to Volume and Spread Analysis often in this section and so shall use the acronym VSA throughout. We have indicated already that if you are going to become a good trader which then leads to making money in the stock market you must trade with the consensus of professional opinion and not against it. This means that once a move is in progress you must be able to identify the underlying trend in price movements and trade with the trend of the market. This does not mean that you cannot take a temporary short position in a bull market if it is to your advantage just that you must be aware that you are swimming against the tide and be aware of the limitations of the position. Nor does it mean that you cannot try and catch the turns provided that you know what you are doing. Trending can help immensely both in timing moves and maintaining your awareness of the underlying flow of the market. An Introduction to Trending At this date of writing there seems to be no documented scientific research into trend lines and trending. We cannot therefore proclaim with absolute certainty that we know how trend lines work or even that they do in fact work at all - I can however state from many years of study and use that trend lines appear to work and represent resistant areas to prices. What Chartists call trend lines are more properly called trend channels but we will use the Chartist terminology to distinguish between the general use of trend channels and the more specific application of trend lines. Constructing Trend Lines Trend lines are drawn on a chart 1 To show the chartist the direction of the underlying trend to the data. As you will have seen from any chart of market prices any market seems to move up and down but is continuously moving in one general direction. The moves are shifting up and down seemingly at random but generally with an overall movement in one direction. One way of removing noise in the data .
