A common expression in trading is “trend is your friend”. This expression has stood the test of time because trends are so important to everything. trading plan. Forex trendlines can be seen in almost any chart analysis due to their usefulness and simplicity. This article provides traders with a detailed guide on: trend line It’s how you draw them and how you apply them when trading.
Why is trend your friend in forex trading?
A top trader will admit that there is no such thing. trading strategy 100% win rate. This statement may seem obvious, but this is exactly why traders should be on the lookout for things that can increase their chances of winning a trade. One of those candidates is Trend.
Learning how to trade in an imperfect world is very important.Trend trading is an easy way to hide it strategy Correct imperfections by identifying the strongest trends in the market. As seen below, short trades can still work even if traders enter when the market briefly rises.
The dominant trend (downwards) was strong enough that a loser could turn into a winner depending on where the stop loss was placed.
The chart below shows that there are many more Pips available in the direction of tendencyas opposed to going against the trend.
How to determine trends
To determine trends, price list On selected currency pairs with candlesticks between 100 and 200. So answer the question, which direction is the price generally moving?
If the trend is up, check the direction By looking for a series of higher highs and higher lows on the chart. A valid uptrend looks like the chart below.
Notice how each successive high is higher than the last high, and each low is higher than its predecessor.
But in reality, all trends come to an end. Therefore, this uptrend turns into a downtrend when a series of high and low highs are established. The chart below shows the points traders should watch for trend reversals when the market breaks below previous lows.
For downtrends, look for a series of falling highs and falling lows on the chart to confirm the downtrend. Below is a valid downtrend chart.
This downtrend turns into an uptrend when a series of highs and lows start to form. The image below shows a trend reversal.
It is important to note that there are no specific rules for identifying highs and lows for trend analysis. The idea is to choose and trade the most obvious example of an uptrend or downtrend. The emphasis is on finding forex pairs in obvious trends that a 10-year-old can identify trend direction from across the room. If you don’t know the direction of the trend, move to the next pair where the identification is clear.
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