1. Visually
Simplest method: look at the chart. If price goes from bottom-left to top-right — uptrend. Opposite — downtrend.
Zoom out the chart — trend becomes more obvious.
Trend Trading: Don't Fight the Market
"Trend is your friend" — one of the oldest truths in trading. Trading against the trend is like swimming upstream: possible, but why? Let's examine how to identify trends and use them to your advantage.
What Is a Trend
A trend is directional price movement:
- Uptrend: Price makes higher highs and higher lows (HH, HL).
- Downtrend: Price makes lower highs and lower lows (LH, LL).
- Sideways (range): Price moves within a range without clear direction.
In Smart Money this is called market structure — understanding what phase the price is in.
How to Identify a Trend
2. By Structure
Mark the last 2-3 highs and lows. If each is higher than previous — uptrend. Lower — downtrend.
This is the basis of market structure analysis.
3. Higher Timeframe
Trading on M5? Check the trend on H1. If H1 shows uptrend — only look for buys on M5.
Higher TF sets direction, lower TF — entry point.
4. Moving Average
Price above MA 50/200 — likely uptrend. Below — downtrend.
Simple indicator, but don't rely on it alone.
Why Trend Trading Works
Statistics favor the trend:
- Probability. If a trend exists — it's more likely to continue than reverse.
- Big players. Smart Money drives trends. Trading with the trend, you're on their side.
- Liquidity. More liquidity in trend direction — price has room to move.
- Less stress. No need to catch reversals — just follow the movement.
How to Trade with the Trend
Step-by-step algorithm:
1Identify trend on higher TF (H1 or H4)
2Wait for pullback against trend on working TF (M5-M15)
3Find entry point: order block, FVG, level
4Enter in trend direction with correct expiry
Key principle: enter on pullback, not at the peak of the move.
Trend Trading Mistakes
- Entering at the peak. Price already moved 100 pips up — and you buy. Pullback is inevitable.
- Ignoring pullbacks. Trends don't go in a straight line. Wait for pullback to enter.
- Too small TF. On M1 a "trend" might be noise. Check higher TF.
- Trading against trend. "Price is too high, must fall" — this is how money is lost.
When NOT to Trend Trade
Trend isn't always the best choice:
- Range. If price is in a range — no trend. Trade from range boundaries or wait for breakout.
- Before news. Important news can break any trend.
- Session end. Trends often fade at end of trading session.
- Extended trend. If trend ran too long without correction — pullback probability increases.