Forex trading is on the rise and in the last few months, the industry has seen a wave of new traders who are ready to give trading a shot. This is immensely encouraging for the industry, as it means higher demand and, possibly, heightened liquidity.
But for this rush to prove profitable and sustainable, it is important that newer traders are provided with ample guidance and education to help them make decisions that will benefit them in the long run. There is a common misconception that forex trading is a series of “calculated guesses” – but this isn’t it.
Important Trade Basics You Should Know In Forex
An uptrend is defined as a consistent sequence of rising highs and lows, on the chart or histogram, where the next high and low is higher than the previous one. This shows you that a trend is headed in the upward direction. If you find a platform where you fulfill your all requirements which you need and complete your requirements under one roof, then Gainsky Investments is a platform which provides a different kind of forex trading services because this is an exceptional forex trading platform.
A downtrend is simply the opposite of an uptrend. Here, you’re paying to a sequence of falling highs and lows, where the following high and low is lower than the previous one.
A horizontal trend takes place when the movement of a price happens in a direction that can’t be defined as upward or downward. Basically, the highs are on a similar level, or they are spaced out in a chaotic manner. As for the lows, they are either along a horizontal line or they don’t have a clear path for their direction either.
Think of these trends as the core basics of forex trading. In order to make a trading decision, you have to be able to identify in which direction the highs and lows are headed. But, it is important to remember that this is theory meant to help you find your way.
When it comes to real-life trends, it is hard to pin down a trend to its textbook definition. There is an element of consideration and, sometimes, guesswork in order to identify a trend.
For example, you could encounter a downtrend where the next high is higher than the previous one, or vice versa for a downtrend. It’s hard to avoid these exceptions because of this reality: external influences happen in real-time and affect the direction of a trend faster than we can anticipate.
But, once you get the hang of identifying trends, it becomes significantly easier for you to get a clear forecast for the movement of the price. This is why traders pay fast attention to the direction of a trend, in order to make decisions that could lead to significant returns. When you pay attention to trends, you are simply looking for the more profitable direction to trade in.
Though, you must expect that the price will deviate from the main direction – and this could happen multiple times. You must keep in mind, however, that trend reversals can occur. This takes place when the trend abruptly changes direction and remains in that way for a period of time.
There are two ways to identify trends – with indicators and without them. This article will dig into the ways traders, especially novices, can identify trends in an indicator-free zone.
Identifying the Price Movement
This is the first place to look at when it comes to identifying trends. Forex involves analyzing a visual chart of fluctuating trends – usually in the form of a histogram – and this is how you can pick up on the direction. Gainsky Investments is an exceptional Forex trading platform where you can trade your virtual currency with ease for a short as well as long period of time. To get detailed information, visit us.
The first thing you need to pay attention to is the location of the highs and lows on the chart. This will give you an idea on what to follow before you decide on a move. Depending on their location on the chart, you can determine whether the movement is ascending, descending, or horizontal.
These are signs of trends to pay attention to:
- You can feel confident in a downtrend when each low that follows is noticeably lower than the prior one
- The same can be said for picking out an uptrend, but here you’ll pay attention to the rise in the highs and lows, as opposed to the follow
- For example: if you are looking at an hourly chart, a sudden, upward spike in the price is not a sign of a trend, so do not follow that
- A constant lead in one direction, over a few hours on an hourly chart, is a sign of a trend and often takes the shape of a wave.
You have to remember that a trend is constant, otherwise you will make trading decisions that will lead to major losses. Don’t be deterred by sudden spikes or falls, these happen regularly and aren’t always signs of a new trend.
This Is Only The Beginning
Identifying trends takes time, especially if you are new to trading. You won’t figure it out in one day, and there is nothing wrong with that. The goal, for any trader, should be to form a solid trading strategy that brings in profitable returns.
When you have a solid trading strategy, give you the patience and discipline you need to make constant progress, and take the losses in your stride. If you want some tips about forex trading. Gainsky Investments is a forex shared trading platform that offers different asset trading such as forex and cryptocurrency.
In order to identify the best trading strategy, you need to reach out to an expert trader or broker who can guide you accordingly. If you are interested in forex trading, for the long term, don’t try and do it all on your own. Reach out to a reliable expert and let them help you map out a strategy that will help you win.