As a trader, the first thing that you need to master is what is a trendline. A trendline indicates the trend in the market. It can be an uptrend or a downtrend.
Now, you can draw the trendline yourself. However, most of the trading software can draw the trendlines for you automatically so you don't need to do much. Drawing trendlines is always a subjective matter. It looks obvious but sometimes, you can question the placement of the trendline. But don't worry too much about it when you use this method.
One of the most powerful methods of trading trends is combining trendlines one of the most basic tools in technical with trending candlestick patterns that signal that a trend in place will continue. You can use this combination to decide when to buy and enter a long position or when you should stick with the trend to realize additional profits.
Because trendlines are so useful for trend confirmation, you can trade with confidence when you use the combination of bullish trendlines with bullish candlestick trending patterns. This combination can tell you when to stick with an existing position and when to initiate a new position.
There are many candlestick patterns. Some are simple and some are complex. You can use two stick and three stick candlestick patterns to confirm whether a trend is continuing or reversing itself.
These candlestick patterns not only tell you whether the trend is continuing or reversing itself but they can also tell you the best time for the entry and the exit. Correct entry and exit is what makes a winning trade. You do it wrongly and you will end up with a losing trade. So it is essential that you should use these candlestick patterns with these trendlines in making the entry and exit decisions.
How to exit with a trendline? Trendlines keep changing everyday! The first way to go about it is to draw a support trendline daily and place an appropriate stop loss that is good for that trade. This is a good stop loss exit strategy as the trendlines move with the trend, your stop loss exit also moves daily. The second method is to exit if the closing price is lower than the trendline. However, the first method is far more superior.
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