Trend
Definition
A trend is a sustained directional price move. In an uptrend every new high and low is above the previous ones; in a downtrend, below. The formal signs are the slope of a moving average and ADX above 25. With the trend, pullback entries and breakouts work; against it, only bounces off confirmed levels with a short expiration.
How to identify a trend
The most reliable sign is chart structure: the sequence of highs and lows.
| Sign | Uptrend | Downtrend |
|---|---|---|
| Highs | each above the previous (HH) | each below the previous (LH) |
| Lows | each above the previous (HL) | each below the previous (LL) |
| Moving average (EMA 50) | pointing up, price above it | pointing down, price below it |
| ADX | above 25 | above 25 |
| Pullbacks | short retraces down, then a new high | short retraces up, then a new low |
ADX measures the strength of a move, not its direction: below 20 is a flat, above 25 is a trend in either direction. The direction is read from the structure or from the slope of a moving average.
A trend exists on every timeframe, and it can differ across them: M1 is retracing while the move up on M15 continues. The higher timeframe takes priority: it sets the direction, the lower one gives the entry point.
How to trade with the trend in binary options
- Enter on a pullback, not on the impulse. A buy in an uptrend opens after a red retrace candle, when price has come back to the moving average or a level, not at the peak of the move.
- Expiration to match the timeframe. On M1, 1–2 minutes: price needs time to get back to the move. Too short an expiration on a retrace closes as a loss before the trend resumes. More in the expiration time article.
- Against the trend only from a level with a reaction. One trade, one recovery, then back to looking for an entry with the direction.
- A prolonged trend is a caution sign for signal bots. Reversal algorithms catch losses in a row in it; trend algorithms do the opposite.
In the terminal
In BinoView Supercharts the direction is easy to read off indicators: Adaptive Trend Finder draws sloped lines of the local trend, ZigZag Channels marks the waves and the channel, and Trend Signals and Pocket Dashboard combine the readings of moving averages and oscillators across several timeframes into a single status, from "strong buy" to "strong sell". The simplest filter is an EMA with period 50: no trades against its slope.
How it differs from a flat and a pullback
A flat is the absence of direction: price moves between two levels, highs and lows are not renewed, ADX is below 20. A pullback is a move against the trend inside it: short, and the trend continues afterwards. A trend is what is left when you remove the pullbacks: a chain of highs and lows renewed in one direction. The beginner's mistake is to take a pullback for a reversal and enter against the direction of the higher timeframe.
Frequently asked questions
How do you know a trend has ended?
By a break of structure. In an uptrend the warning sign is a low below the previous one; the confirmation is a candle close below it and a next high that fails to exceed the last one. A single candle against the move is a pullback, not a reversal; a reversal only shows in a new sequence of highs and lows.
Which timeframe should I read the trend on?
A higher one than your working timeframe. For 1-minute trades the direction is checked on M5 and M15: if the move there is up, you look for a buy after a pullback on M1. A trend exists on every timeframe and they can contradict each other; the higher one takes priority.
Can you trade against the trend?
You can, but only from a level that has already shown a reaction, with a short expiration and no more than one recovery trade. Price moves against the trend reluctantly: the pullback can end at any moment, and a trade betting on its continuation closes as a loss.