There are many different types of trends that stocks and other assets can follow within Binary Options. The two dominant trends are known as the bear and the bull markets. In a bull market, the prices of stocks are, generally speaking, going up. The opposite is true in a bear market. Here, stocks prices on the average are going down. But there are many sub-trends and trends within trends that you can oftentimes be very confused about just which direction a stock is headed.
Going with a dominant trend can be a good long term plan, but for day and swing traders, this is not necessary. Instead, these traders look for the trends within trends. These are a bit tougher to spot, but with a careful study of a stock’s daily price chart, you can see that—even if the price is sloping upward on the weekly chart—it has ups and downs during that upward trend. Riding these small ups and downs is exactly what day traders do. They look for these tiny trends and pump large amounts of money into them with the hopes of a small gain in price so that they can realize a profit.
Many investment advisors recommend that you don’t short a stock in bull markets, but this is not true for day traders. These people can short the tiny downward trends mentioned above and go long on the tiny up trends. This allows day traders to make profits on both sides of a trade, regardless of what the actual overall trend might be.