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Trend Analysis

 
Investment Dictionary: Trend Analysis

An aspect of technical analysis that tries to predict the future movement of a stock based on past data. Trend analysis is based on the idea that what has happened in the past gives traders an idea of what will happen in the future.

There are three main types of trends: short-, intermediate- and long-term.

Investopedia Says:
Trend analysis tries to predict a trend like a bull market run and ride that trend until data suggests a trend reversal (e.g. bull to bear market). Trend analysis is helpful because moving with trends, and not against them, will lead to profit for an investor.

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Accounting Dictionary: Trend Analysis
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Forecasting technique that relies primarily on historical time series data to predict the future. The analysis involves searching for a right Trend Equation that will suitably describe trend of the data series. The trend may be linear, or it may not. A linear trend can be obtained by using a Least Squares Method. The line has the equation y = a + bt where t = 1,2,3 . . ., b = slope of the line, and a = value of y when t = 0. The coefficients of the equation, a and b, can be determined using these equations:

 
 

 

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Investment Dictionary. Copyright ©2000, Investopedia.com - Owned and Operated by Investopedia Inc. All rights reserved.  Read more
Accounting Dictionary. Dictionary of Accounting Terms. Copyright © 2005 by Barron's Educational Series, Inc. All rights reserved.  Read more