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Trend trading is common sense, but you will be surprised how many traders seem to lose sight of this fact when they get involved in the markets. The problem is that there is a lot of emotion involved in risking your own money, and this blinds people to the obvious.

So one of the first things that the trader should work on is having self-discipline, that is discipline to follow best practices rather than trying to trade instinctively. Instincts are fine in the real world, but tend to work against you in the trading environment.

One of the simplest concepts is that all your trading should be with or in accordance with the immediate trend. While you can find successful exceptions to this, it is a rarity and it is not worth investigating to find out if you have one of them. Anyone who trades against the trend has to at least be very nimble to avoid big losses, and there is no reason to take on this difficult task.

There are several ways that you can determine what the prevailing trend is. Most people think they can tell by simply looking at the chart. There are technical criteria to satisfy for a formal trend, but you can simply see if the price is higher on the right-hand side than the left-hand side, or draw a simple moving average on the chart and see if it is sloping upwards.

However you do it, if you have an upward sloping trend, for safety you should only be looking to take long positions. When you are taking long positions, the best place to buy is on a temporary dip or retracement. You can usually locate this by drawing a trendline connecting the lows of the price chart. If the price comes down to touch the line, then you can be reasonably sure that this is a dip and the price will go back up from there, provided nothing has happened to make you suspect a change in trend.

You can do the same with a bear market, where the prices coming down. In this case the trend line connects the successive highs, and your place to enter the trade would be when the price peaks and touches this trendline. Your full expectation is that the resistance will hold, and that the price will bounce off the trendline and continue in a downward direction.

You will be surprised how many people watch a stock chart, and see the price comes down to extremely low levels. The natural reaction is that the price simply can't go lower, and that the stock is a bargain and they should buy. You should ignore such feelings and opinions, as there is no good basis for them when you are talking about financial markets. Of course the stock can go lower, it can even go to zero if there is no good reason for it to turn around. The actual price of the stock is no determinant of whether it is a bargain.