A popular trading expression is “trend is your friend”. This statement has stood the test of time because trends are so important to everyone. trading planForex trendlines can be seen in almost any chart analysis due to their usefulness and simplicity. This article provides a detailed guide for traders. trend line How to draw them and how to apply this when trading.
Why are trends your friend in forex trading?
Top traders admit they are not single trading strategy It has a 100% win rate. This explanation may seem obvious, but this is exactly why traders need to look at things that can increase their chances of making winning trades. One of those candidates is Trend.
Learning how to trade in an imperfect world is very important.Trend trading is an easy way to cover up strategy Identify flaws by identifying the strongest trends in the market. As you can see below, even if a trader enters when the market briefly rises, his trades short may still do well.
The prevailing trend (downward) was so strong that it could turn a loser into a winner depending on where the stop loss was placed.
The chart below shows that there is more. Pips available in the direction of tendencyrather than bucking the trend.
How to determine trends
To determine trends, price chart With 100-200 candles in your favorite currency pair. Then answer the question in which direction the price is generally moving?
If the trend is up, check the direction Look for a series of highs and lows on the chart. A valid uptrend looks like the chart below.
Notice that each successive high is higher than the previous one, and each low is higher than the previous high.
But in reality, all trends end. Therefore, this uptrend turns into a downtrend when a series of highs and lows are established. The chart below shows the points where traders should watch out for trend reversals as the market has broken below previous lows.
For a downtrend, look for a series of highs and lows on the chart to confirm the downtrend. Below is a chart of a valid downtrend.
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 pick the most obvious example of an uptrend or downtrend to trade.I insist on finding forex pairs with such an obvious trend that a 10-year-old can identify the 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 obvious.
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