There are mainly three kinds of trends in regards to time measurement:
1. Primary (long-term),.
2. Intermediate (medium-term) and.
3. Short-term.
These are gone over in more detail below.
1. Main trend A main trend lasts the longest period of time, and its life-span might range between 8 months and 2 years. This is the major trend that can be spotted easily on longer term charts such as the everyday, weekly or month-to-month charts. Long-term traders who trade according to the main trend are the most worried about the fundamental photo of the currency sets that they are trading, given that fundamental elements will provide these traders with an idea of supply and need on a larger scale.
2. Intermediate trend Within a primary trend, there will be counter-cyclical trends, and such rate motions form the intermediate trend. This kind of trend could last from a month to as long as eight months. Understanding exactly what the intermediate trend is of excellent importance to the position trader who tends to hold positions for a number of weeks or months at one go.
3. Short-term trend A short-term trend can last for a few days to as long as a month. It appears during the course of the intermediate trend due to worldwide capital streams responding to daily economic news and political circumstances. Day traders are interested in identifying and recognizing short-term trends and as such short-term price movements are aplenty in the currency market, and can offer considerable earnings chances within a really short period of time.
No matter which amount of time you might trade, it is important to keep track of and recognize the main trend, the intermediate trend, and the short-term trend for a better overall photo of the trend.
In order to embrace any trend riding method, you need to first determine a trend direction. You can quickly determine the direction of a trend by looking at the price chart of a currency pair. A trend can be defined as a series of greater lows and greater highs in an up trend, and a series of lower highs and lower lows in a down trend. In reality, rates do not constantly go higher in an up trend, but still tend to bounce off areas of assistance, much like rates do not constantly make lower lows in a down trend, however still have the tendency to bounce off areas of resistance.
There are three trend instructions a currency set might take:.
1. Up trend,.
2. Down trend or.
3. Sideways.
Up trend In an up trend, the base currency (which is the very first currency sign in a pair) values in worth. An up trend is characterised by a series of greater highs and higher lows. Base currency 'bulls' take charge throughout an up trend, taking the chances to bid up the base currency whenever it goes a bit lower, believing that there will be more purchasers at every action, hence pressing up the prices.
2. Down trend On the other hand, in a down trend, the base currency diminishes in worth. If EUR/USD is in a down trend, it suggests that EUR is decreasing against the USD. A down trend is characterised by a series of lower highs and lower lows, however similarly, the currency does not always make lower lows, however still has the tendency to make lower highs. The downward slope of lower highs is formed by the base currency 'bears' who take control during a down trend, taking every chance to sell since they think that the base currency would go down a lot more.
Sideways trend If a currency pair trendy gear does not go much greater or much lower, we can say that it is going sideways. If you want to ride on a trend, this directionless mode is one that you do not want to be stuck in, for it is very likely to have a net loss position in a sideways market specifically if the trade has not made enough pips to cover the spread commission expenses.
Therefore, for the trend riding strategies, we will focus only on the up trend and the down trend.
Intermediate trend Within a primary trend, there will be counter-cyclical trends, and such rate movements form the intermediate trend. A trend can be defined as a series of greater lows and higher highs in an up trend, and a series of lower highs and lower lows in a down trend. In reality, rates do not constantly go higher in an up trend, but still tend to bounce off areas of support, simply like prices do not always make lower lows in a down trend, however still tend to bounce off areas of resistance.
Up trend In an up trend, the base currency (which is the first currency symbol in a set) appreciates in worth. Down trend On the other hand, in a down trend, the base currency depreciates in worth.
