Search Dictionary

Definition of 'Downtrend'

A downtrend is a period of time when the price of a security, such as a stock or a bond, is declining. Downtrends can last for a few days, weeks, months, or even years.

There are a number of factors that can cause a downtrend, including:

* Economic conditions: A recession or other economic downturn can cause the prices of stocks and other investments to fall.
* Political events: A change in government or a major policy shift can also lead to a decline in stock prices.
* Company-specific news: Negative news about a company, such as a product recall or a financial scandal, can cause its stock price to fall.

Downtrends can be difficult to trade, as they often involve periods of sideways movement or consolidation. However, there are a number of strategies that can be used to profit from downtrends, such as short selling, buying put options, and using stop-loss orders.

It is important to remember that downtrends do not last forever. Eventually, the market will turn around and begin to move higher again. Therefore, it is important to be patient and not to panic if your investments are declining in value.

If you are considering investing in a downtrending market, it is important to do your research and understand the risks involved. You should also have a clear investment plan and be prepared to hold your investments for the long term.

Do you have a trading or investing definition for our dictionary? Click the Create Definition link to add your own definition. You will earn 150 bonus reputation points for each definition that is accepted.

Is this definition wrong? Let us know by posting to the forum and we will correct it.