THE CONCEPT OF “TREND” IN THE FOREX MARKET
Even the most inexperienced novice trader understands that the ability to correctly determine the trend and predict its further direction is a key moment in trading. Trend is the basis of technical analysis and a factor to be considered in all circumstances.
So what is the trend in Forex trading? This is the direction of the price movement of a financial instrument, which reflects the state of the market as a whole. There are three types of trends:
The name itself already contains information about where the price is going. If the trend is upward, then, accordingly, the price moves up, which means that it is growing. If the trend is down – it falls. The sideways trend indicates the consolidation of the market, the state when the quotes are moving in a narrow corridor, without going beyond it. Some traders call this state the lack of trend. In fact, this behavior of quotations indicates either the equality of supply and demand for the currency pair, or the absence of major financial players in the market, the so-called market makers, able to influence the situation.
Often traders who are just beginning to get acquainted with the Forex theme are surprised when they hear phrases such as “the power of bulls is growing” or collide with concepts such as “bearish trend”, “bullish activity”, etc. it So happened that in the trading environment, each type of trend has two names. To avoid confusion, it is worth remembering that the upward price movement can still be called bullish, and the downward – bearish trend. Therefore, if you hear the phrase “bears clashed with bulls”, do not rush to imagine a picture of the terrible battles of the animal world, perhaps we are talking just about trading in the Forex market. Sideways trend is also called flat. In General, the concept of trend is used in various fields, for example, in the fashion world, and characterizes what is relevant at the moment. On Forex, the direction of price movement is one of the most relevant concepts.
How to use the trend in trading?
One of the important conditions for successful Forex trading is the skillful use of the trend. It is not difficult, if you know how to “read” and predict its direction. For such purposes, it is best served by graphical elements that can be effectively used even by those who are just starting to get acquainted with Forex trading. Once the trend is determined, you should wait for the correct point of entry into the market and then open a deal. Naturally, with a growing trend, it is better to open a position to buy a financial instrument, in order to sell the currency later, when its quotation reaches a higher level, and with a downward one – to sell the currency, then to buy it cheaper. When flat experienced traders advise to refrain from trading, as it is difficult to determine when and where the price will begin to move, especially if you are a novice trader. In any case, it is always better to follow the Analytics provided by large and reliable companies such as, for example, UBK Markets. Thanks to the quality work of professionals, you will always know what trend in the market, where it starts, and when you can expect a reversal of the price movement.
The trend can be called the basic basics, because it is considered to be everyone who trades in the Forex market: the largest financial companies, traders with years of experience and beginners. It is for beginners trend trading is a great opportunity to quickly learn to understand the market and make a significant profit.