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What are the Different Types of Market Trends?

Sep-15-2022Blog by – Mr. Ashish AjmeraRead Time: 4 Min.Word Count: 483
276What are the Different Types of Market Trends?
Whether you are an active or passive investor, you must have often come across the phrase
‘market trends’. These trends play a crucial role in every investor’s life because they help to
do a technical analysis of the stocks and determine whether it is a good strategy to put more
money or exit. Let’s understand in detail.

What is a Market Trend?
A market trend refers to the directional movement of the price of a financial asset in the
stock market. If you keep a close tab on the historical and current market trends, you can
learn to minimize your risks and make profitable investments.

Types of Market Trends
There are three primary types of market trends:

1. Uptrend
Also known as a rising or bullish trend, an uptrend takes place when stock prices rise in
value consistently over weeks or years. The price touches a new high almost every day and
falls lower than it did previously. It usually reflects in a zigzag pattern and the formation
looks like higher highs and higher lows. During the upward trend, more investors are likely
to buy due to positive sentiment in the market. They drive the prices higher.

2. Downtrend
During the downtrend, the market follows the pattern of lower highs and lower lows. The
stock prices fall successively. The investors prefer to sell their shares with even the smallest
amount of rising. Buying is not recommended during the downtrend even though prices are
lower.

3. Sideways Trend
A sideways trend occurs when the stock prices remain static. They neither touch the highest
point nor the lowest point. It is a horizontal price movement usually governed by the equal
forces of demand and supply. The stock prices go up and down and repeat the pattern. It
could be tricky to decide whether you should buy the stock or not.

Market trends require in-depth understanding and technical analysis. You need to watch out
for short-term and long-term fluctuations determined by various socio-economic, political,
and international factors. It is also necessary that you don’t follow the herd mentality or else
there is a risk of losses. This is because what works for others may not work for you. You
have to ensure that you leverage the market trends as per your investment goals and risk
appetite.

In case you don’t have time or resources to study the market trends every day, it is
recommended to seek guidance from SEBI-registered stock brokers like Ajmera x-change.
With years of experience, Ajmera x-change can align your investments with market trends.
It is one of the most reputed and trustworthy financial services platforms that has served as
stock, securities trading, and mutual funds investment advisor to hundreds of investors. If
you are looking for investment in bonds or investment in IPO to achieve your financial
goals, Ajmera x-change can help you with that too.

Get in touch to know more.
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