Trends of Forex. How to determine the trend in Forex

Traders can find a good trend, and then profitably trade with an increase in prices. Controlling the exit from the market can be accomplished using previously identified highs and lows.

However, it can be extremely difficult for new traders to quickly determine the trend and complete the trading strategy. Nevertheless, you can learn to predict Forex trends, and most trend-based strategies can be divided into three logical components. This is what every newcomer should learn first. Below are the basics of trend strategies, which are built on the identification of trends, planning and determining the yield.

How to determine the trend of Forex?

The first step to understanding the trend of trade is to find a trend. There are many ways to determine the trend, but the simplest one is to find a price that creates higher highs or a higher minimum. For example, if the price in the GBP / USD pair jumps up, it means that it makes higher highs and the trend goes up. Conversely, if the price goes to lower lows, the average price is potentially reduced in the downtrend.

However, one important thing to remember here is that the trend, in fact, is not a strategy in itself, but simply an additional point of leadership that increases the probability of successful trading. Nevertheless, simply using a trend in the market is not enough.

As the market moves (higher or lower), what are its previous turning points - all these become reference points that you can use to determine market trends. The easiest way to determine the trend is to check and see how the market is making a picture of higher highs and lows. This is just an old good visual observation of the nature of the price action on the market at the moment, but it will help to see the ascending or descending Forex Trend. Despite the fact that this is not a strategy, such a simple diagram is mandatory for study. This monitoring gives you the basic idea of finding higher highs (HH) and lows (HL) for uptrends and lower highs (LH) and lows (LL) for downtrends.

Given the information outlined above, traders should look for opportunities to buy GBP / USD in their current trend. If the trend continues, it is expected that the price will remain at a high level, while the new highs will continue to be created.

Planning

Once the Forex Trend is found, traders can choose one of many tactics to enter the market. One of the easiest ways to enter into it is through the use of a breakthrough. Since the definition of an uptrend is to create higher highs and lows, traders can plan when to enter the market when the trend continues and the GBP / USD move will advance to a higher high. In addition, the forex rating includes several currency pairs, fluctuations of which are always worthy of attention.

Traders using this technique can set a record above this value, and in breaks between price fluctuations they will be introduced into the market. There are two advantages of using an input order.

First, you do not have to be constantly on the web and personally monitor the situation in which you want to start trading. As long as you have a plan drawn up by an assistant and you have chosen a price to trade, your order will automatically work.

Secondly, the transaction price never rises above the previous high. However, this order can also be deleted. Now that you have a recorded plan, you can look at the final part of your strategy.

Shutdown

When trading in the currency market, you should be prepared for the fact that at any time you can lose money. That's why, using Forex trends, it's important to know that you can not use them until infinity. In a trend, traders can place stop-loss under the previously identified minimum of fluctuations (above the lowest). In the event that the price breaks through under this value, this may mean that temporarily (at least) the trend may be over. Traders can exit one position at this point by using a stop order.

What do you need to remember?

Knowing how to make a profit is also an important part of any trend and trading plan. Traders should be careful to avoid the mistake of Forex number one, when, when striving to get more benefits, the market participant goes to great unreasonable risks and as a result loses all money. Using the example above, the following conclusions can be drawn: if a stop loss of 150 pips has been set for a swing minimum, traders can expect a substantial profit. But if the 300 pip limit is still set, this would create a risk / reward ratio in the 1 to 2 ratio.

Speaking further about foreign exchange trading for beginners, it is necessary to consider how to determine Forex trends, and from another point of view. Many traders-beginners have heard that the trend is your friend until he bends down. This rule works not only on Forex, but also on any other market.

Forex Ratings and Strategies

The ability to determine long, medium and short-term trends towards a currency pair will help you to make a big profit, because you can realize in this much more than your plans.

So, the downward trend of Forex is the direction in the daily chart when looking for records on the lower price indicators. It allows you to conduct a measured calm trade. The lower value of the price should not embarrass you, you do not have to worry about which direction this trend is going up - or down. It is important only to use this movement to your advantage.

Where to begin?

The first thing you should do at the beginning of the trading day is to carefully study the daily charts of the currency pairs with which you are working. Pay attention to a strong trend in any direction. Given that you are working with the daily charts, the indicators for the next day will basically show very similar results, as trading in the day is characterized by strong long-term trends. Do not be fooled, but safely use yesterday's indicators for the next trading day. If you study the daily charts and indicators of the Forex trend at least once a day, it will help you keep up to date with any major movements in the market.

The use of a daily chart should facilitate many tasks for traders. First of all, this will help to determine whether the currency pair is in a strong trend. If there are confirmed doubts, you should go to the chart of the next currency pair.

Cyclicity

As already noted, the studied trends in the Forex market will mark movement in one direction, which then slows down and will either be consolidated and changed, or repeated cyclically. It is on this basis that you can apply any suitable and convenient strategies to you.

That is, the trader should monitor any obvious setting of the price action, which is formed after the market rolls back to the "merging" level. This can be a swing point, a moving average, or some other level of support or resistance. In any case, you should trade "from value" in the trend market.

Moving Average

So, one of the tools that you can use to find "value" in the market is the moving average. This is not an ideal meter for all occasions, but sometimes it helps to trade efficiently, especially if you apply exponential moving averages (EMA) on days 8 and 21.

Specialists recommend using them as a general guide or assistant to find significant points in the market. For example, often the 21 day EMA will coincide with the swing point in the trend market. It turns out that you have several factors that can be put together.

Is Forex Strategy ideal?

However, these moving averages should only be used as a general guide, not an actual signal. Remember that you only use them as an assistant to see the dynamic support and resistance levels (to add a merge), and to direct the trend. At the same time, your main focus is on visual observation of price activity in the market and changes in levels, that is, without any EMA.

In addition, it is important not to fall into the trap of the so-called "breakthrough". Many novice traders remain in the same cycle and at the same time try to trade in breakouts all the time. In fact, this is not an effective long-term strategy, because large market participants take this into account, and it is unlikely that you will be able to constantly play to your advantage. Instead, it is better to approach the key market levels, swing points, EMA levels in the market and always compare them with the confirmation of the price signal.

Concluding observations on trade with trends

You always need to use Forex trends as soon as they occur. You will never know how long they will last, so try to use them when they are present. Markets tend to be in a trend of only about 25 to 35% of the time, and the rest of the time they are in range or floating activity. The main trick is to learn how to identify a trend market in order to get the most out of it and successfully exit as soon as possible.