Let's analyze them in detail…
You’ve probably already heard of a trend.
On your chart, it simply looks like…
Higher Highs and Higher Lows (Uptrend)
When a stock is in an uptrend, we want to be a buyer.
Lower Highs and Lower Lows (Downtrend)
When a stock is in a downtrend, we want to be a seller.
One important thing to note is that you don't want to buy stocks in a downtrend and sell stocks in an uptrend.
This is not investing where you're going to hold on for years as you are trading and exit the markets in an out depending on your timeframe.
One thing to share with you that to define a trend…
You can use the 200-period moving average.
200-Period Moving Average
It is an indicator you can get on most chatting platforms.
I've applied this to the daily timeframe on Amazon (AMZN)…
You can see that the price of Amazon right now is above the 200 MA.
So when you see prices above the 200 MA…
It systematically gives you a bias that you want to be buying only in this market because the market is in an uptrend!
Vice-versa for downtrends if the price is below the 200 MA.
You either want to be selling or holding on to cash.
Of course, there are exceptions especially traders who are more advanced in their trading methodologies.
But if you are still new to trading, then this rule will keep you on the side of the markets more often than not.
This is foolproof but it will keep you on the right side of the markets more often than not.