There are generally three kinds of trends in terms of time measurement:
1. Primary (long-lasting),.
2. Intermediate (medium-term) and.
3. Short-term.
These are discussed in more detail below.
Main trend A primary trend lasts the longest period of time, and its life expectancy might vary between 8 months and 2 years. Long-term traders who trade according to the primary trend are the most worried about the basic picture of the currency sets that they are trading, given that fundamental elements will supply these traders with an idea of supply and demand on a larger scale.
Intermediate trend Within a main trend, there will be counter-cyclical trends, and such price movements form the intermediate trend. Understanding exactly what the intermediate trend is of great importance to the position trader who tends to hold positions for a number of weeks or months at one go.
Short-term trend A short-term trend can last for a few days to as long as a month. Day traders are concerned with finding 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 very short period of time.
No matter which timespan you might trade, it is essential to monitor and determine the primary trend, the intermediate trend, and the short-term trend for a much better general image of the trend.
In order to embrace any trend riding strategy, you must first determine a trend instructions. You can quickly evaluate the instructions of a trend by looking at the price chart of a currency set. 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 always go higher in an up trend, however still tend to bounce off locations of support, similar to costs do not always make lower lows in a down trend, however still have the tendency to bounce off locations of resistance.
There are three trend directions a currency set could take:.
1. Up trend,.
2. Down trend or.
3. Sideways.
1. Up trend In an up trend, the base currency (which is the first currency sign in a pair) values in worth. For example, if EUR/USD remains in an up trend, it implies that EUR is rising greater against the USD. An up trend is characterised by a series of higher highs and greater lows. However in reality, sometimes the currency does not make higher highs, however still makes higher lows. Base currency 'bulls' take charge throughout an up trend, taking the opportunities to bid up the base currency whenever it goes a bit lower, believing that there will be more buyers at every step, hence rising the prices.
2. Down trend On the other hand, in a down trend, the base currency depreciates in worth. For example, if EUR/USD remains in a down trend, it implies that EUR is decreasing versus the USD. A down trend is characterised by a series of lower highs and lower lows, however similarly, the currency does not constantly make lower lows, however still tends to make lower highs. The downward slope of lower highs is formed by the base currency 'bears' who take control throughout a down trend, taking every opportunity to offer because they think that the base currency would go down much more.
3. Sideways trend If a currency pair does not go much greater or much lower, we can say that it is going sideways. When this occurs the rates are moving within a narrow range, and are neither valuing nor depreciating much in worth. If you wish to ride on a trend, this directionless mode is one that you do not want to be stuck in, for it is highly likely to have a bottom line position in a sideways market particularly if the trade has actually new trendy gears not made sufficient pips to cover the spread commission expenses.
For the trend riding strategies, we shall focus only on the up trend and the down trend.
Intermediate trend Within a primary trend, there will be counter-cyclical trends, and such price motions form the intermediate trend. A trend can be specified 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, costs do not always go higher in an up trend, but still tend to bounce off locations of assistance, simply like costs do not always make lower lows in a down trend, but still tend to bounce off areas of resistance.
Up trend In an up trend, the base currency (which is the first currency sign in a set) values in worth. Down trend On the other hand, in a down trend, the base currency depreciates in value.