1. A trend begins with capital flowing into an asset based on a perceived increase in the future value of the asset.
2. Trends are identified by higher highs and higher lows for several days in a row or the reverse lower highs and lower lows.
3. Moving averages can also identify trends based on a moving average sloping up or sloping down visibly.
4. A moving average can also act as support or resistance for a stock as it trends in one direction and bounces off a key moving average.
5. Trends tend to persist because the owners of the asset have no reason to sell and tend to just let their position ride causing the trend to continue.
6. Supply and demand causes trends when you have a lot of dollars chasing a limited asset.
7. In stocks, up trends are caused by mutual fund managers building large positions in their favorite stocks.
8. Down trends in stocks are caused when institutions start to unload a stock or investors cash in their mutual fund shares during bear markets and managers have to raise cash by selling their holdings.
9. Capital is always looking for great returns so they chase stocks with the biggest earnings expectations planning on the stock price following.
10. Trends tend to persist until acted on by an opposing force. Sometimes this is as simple as running out of buyers or sellers of the asset.

The money is in the big trends, look for them, find them, and ride them until they end.

“The trend is your friend until the end when it bends” -Ed Seykota