Trend

A trend reflects the underlying movement in data after short-term fluctuations, seasonal patterns and random noise are set aside. Identifying trends helps businesses, investors and policymakers understand what is happening and anticipate what might come next.

For example, a company's revenue might rise and fall from month to month, but if it has generally grown over five years, it shows an upward trend. Similarly, an economy's productivity might show a long-term upward trend, despite dips during recessions.

Trends can be identified visually from charts, or more formally using statistical techniques such as moving averages, which smooth out short-term movements, or regression analysis, which fits a line through the data.

In investing, trends are central to technical analysis, where traders try to identify and follow price trends, and to momentum strategies, which buy assets that have been rising. A common saying among traders is that the trend is your friend.

Trends do not last forever. They can slow, reverse or break suddenly because of new information, changes in technology or shifts in the economy. Extrapolating past trends too far into the future is a common forecasting error.