Every adept trader knows, to win a Forex trade, you have to grasp market trends! Each trade conducted in the foreign exchange market follows a pattern. Though known for its chaotic and unpredictable nature, Forex sticks to certain trends, and capturing these leads to a tremendous victory. The good thing about trading currencies is that the market can only move three ways - up, down, or sideways. The difficulty lies in the fact, that there is no period of stable motion. A currency pair might see an uptrend in the morning, and by noon it is left plummeting!
Studying market momentum will help analyze better, price movements and profitable openings. Without knowing the best entry points, consistent profits will be hard to come by. Forex trading strategies focus mainly on fundamental and technical analysis, that serve to help traders plot out the best timeframes to work on, the most dominant currency pairs at that instant of time, and possible risks involved.
 |
| Use Moving Trends to Trade Forex Better |
Here are 5 ways to observe and capitalize on market trends:
1) Using The Line Graph: While bars and candles take the spotlight, an immensely efficient tool - the line graph, escapes notice! Charts aren't easy to study, and catching trends are no cakewalk either. With the tremendous amounts of noise on the chart, monitoring it becomes difficult! With line graphs as a part of your Forex trading strategy, you can eliminate this hassle, by clearing out all clutter. While bar graphs and candlesticks give a detailed view of the chart, trend capturing is done better on the line graph. With timely switching to line graphs, traders can have a grip over market movements and also analyze, capitalize on trends.
2) Observing Peaks and Falls: The highs and lows of a market speak volumes about buyer-seller mentality. When buyers are higher in number, there is an uptrend. Similarly, when sellers start selling lower, downtrends are seen. Higher highs are caused when there is a huge price rush due to an increase in buyers, and lower lows are birthed when sellers take a price to the rock bottom! A Forex market is meaningless without highs and lows. Foreign exchange is a field that sees a constant power-shift between buyers and sellers, which inevitably results in ups and downs in the price charts.
3) Trend Lines: Each trend sees a rise and a fall. Highs/lows help observe the initial trends, while trendlines are better during the conclusive periods. Only with 2 or more touch-points can a trendline be conceived. There are no limits to the number of trends that can appear in one trade; Forex sees multiple trends in each trade. The transition from one trend to another is signaled by trendlines. These work best during breakouts when a particular trend is starting to see the spotlight. Combined with proper indicators, trendlines can work amply in the favor of a trader.
4) Moving Average: These are one of the best indicators to analyze market movements. Several traders, however, make the mistake of banking on fast MAs, which seldom last long enough to utilize. On the contrary, slow moving signals are very lethargic in nature and have a very gradual start, appearing too late. Implementing MAs in your Forex trading strategy will prove immensely beneficial, depending on the timeframe you work on!
5) Implementing the ADX Indicator: This is a craft of beauty; an ADX indicator helps determine the direction of a trend and the strength of the same. It has three lines, each of a unique meaning; the ADX line which conveys the strength of a trend, the +DI line which indicates the bullish strength, and finally the -DI line which shows the bearish strength.
Trends govern most, if not all Forex trades. Most branches of trading see movements in price and value of financial commodities; these movements become trends after multiple recurrences. Adept traders are quick to catch on to these growths, and make a good winning! A plethora of tools are provided by Forex brokers for traders to avail and utilize. A strong strategy combined with the right indicators and chart mapping tools can lead to amply profitable trades!
Want to attain mastery over trends? Call WesternFX today! With the assistance of our world-class Forex brokers, there will be nothing impossible. From Forex trading strategies to platforms, we will equip you with the best of all, and ensure your climb to the top is swift as it is comfortable.
