Trade Stock Indices

How to Trade a Downtrend?

Down Indices trend is when the stock indices price of a stock indices chart is moving lower and lower. Indices Trading indices prices generally close lower than where they opened.

How to Trade Downward Indices Trend: Indices traders use the downward indices trend direction to open sell indices trades

Drawing a Downward Indices Trend Line

When it comes to learning how to draw a downward indices trend line, you need to know that when the stock indices trading market is bearish it forms lower lows and lower highs forming a downward general indices trend direction - downwards indices trend. These are the points that are used to draw a downward indices trend line.

To draw downward indices trend setup we use resistance levels and to do it correctly two resistance levels are needed. When stock indices price touches this downward indices trend line, then we open sell stock indices trades and place stop loss just a few pips above the sloping resistances;

How to Trade a Downtrend? - Strategy for Trading a Indices Downward Trend

Trading This Down Indices Trend Market Move

When trading with this down indices trend method, this downward indices trend setup will show the general direction of the stock indices trading market as downwards therefore indices traders will only open short sell stock indices trades. These resistance levels are the levels where if stock indices price retraces then these points will provide strong resistance. This is why many indices sellers will wait until stock indices price retraces upwards and hits these retracements levels to open sell stock indices trades. Trades opened at these levels have a high Reward to Risk Ratio and have little drawdown.

For Example, in the above downwards indices trend example, a indices trader would have opened short sell indices trading signals at the resistance 1, resistance 2, resistance 3 and these sell stock indices trades would have been opened with minimum amount of draw-down/retracement.

How to Draw a Downward Indices Channel

A downwards indices channel is drawn by drawing a line that is parallel to the downward indices trend line and then adjusting it to touch the bottom boundary of the stock indices price movement. This then forms a channel and as long as the stock indices price stays between these two channels the general market down indices trend direction is intact the stock indices trading market direction will continue being bearish.

How to Draw a Downward Indices Channel - Indices Downward Indices Trend Trading Strategy

Trading the Downward Indices Channel

The downward indices channel is used by stock indices traders to show levels where it best to take profits. Traders will take some profit once the stock indices price touches the lower channel or the lower channel and wait for another retracement before opening a short sell indices trade again.