Forex Market Trends - How You Can Use It To Make Money On Forex Trading
Forex market trends mean prolonged movement of the market in one specific direction, whether it is up or down. Different types of traders trade in different time frames. For a day trader a long term trend might last for a few hours. A medium term swing trader would consider a trend to be a price movement that lasts a week or two, while a long term trader look at price movements over a period of months or years.
If you are a day trader, you are of course not concerned with whether there is something like a ten year up and down trend in a particular currency market. For you the long term is between breakfast and lunch - late afternoon is a distant horizon that doesn't concern you at all. Many day traders do large numbers of trades during a single day, making or losing small amounts of money all the time.
Another type of trader is the so called swing trader. Swing traders do not trade as often as day traders. They wait for a medium term trend in the market, and then either go long or short on a particular currency. They will stay in the trade for as long as the trend lasts, and try to get out just before it reverses. This of course is more of an art than a science, since there is nobody that can actually predict when the market will turn around. External factors can cause it to turn around within a matter of hours.
The last type of trader we are going to discuss is the long term trader. Many would argue that there is no such thing as a long term trader - that it's simply another word for an investor, someone like Warren Buffet. These guys are often big players in the market. They buy and sell massive quantities of forex, but over a much longer period of time than day traders or swing traders.
The tools of choice for day traders are called technical indicators. These are a series of mathematical formulas often displayed visually in the form of charts. All of them have one thing in common: they use the historical behavior of the market to try and predict future price movements. The most basic technical indicator is probably the moving average. A moving average charts gives one a good visual impression of the direction the price of a currency has been moving in over the past five seconds, or five years, depending on the time frame you are trading in. Another popular group of technical indicators are the trending indicators. They are more refined than simple averages, but still attempt to predict future ups and downs in the price by analyzing past behavior, and then trying to project that into the future.
Long term traders prefer to call themselves investors, and most of the time they only look at fundamental factors to make buying or selling decisions. Banks and other investment houses do, however, often make use of basic technical indicators like the six month moving average of a currency.
There are a number of different chart types being used by traders. The simplest is the line chart, which basically just connects the closing prices to each other. A favorite of many traders is the so-called 'candlestick' charts. A candlestick chart shows both the opening and closing prices, and the highest and lowest prices for the day in a colorful bar type chart. Bar charts only shows the lowest and highest prices of the day.
Forex market trends is a subject that often causes heated debate among traders. There are as many experts as there are traders. Some swear by "the trend is your friend". Others do quite well with buying a solid currency like the Euro when its price is dropping, because they know it will sooner or later rise again. - 23221
If you are a day trader, you are of course not concerned with whether there is something like a ten year up and down trend in a particular currency market. For you the long term is between breakfast and lunch - late afternoon is a distant horizon that doesn't concern you at all. Many day traders do large numbers of trades during a single day, making or losing small amounts of money all the time.
Another type of trader is the so called swing trader. Swing traders do not trade as often as day traders. They wait for a medium term trend in the market, and then either go long or short on a particular currency. They will stay in the trade for as long as the trend lasts, and try to get out just before it reverses. This of course is more of an art than a science, since there is nobody that can actually predict when the market will turn around. External factors can cause it to turn around within a matter of hours.
The last type of trader we are going to discuss is the long term trader. Many would argue that there is no such thing as a long term trader - that it's simply another word for an investor, someone like Warren Buffet. These guys are often big players in the market. They buy and sell massive quantities of forex, but over a much longer period of time than day traders or swing traders.
The tools of choice for day traders are called technical indicators. These are a series of mathematical formulas often displayed visually in the form of charts. All of them have one thing in common: they use the historical behavior of the market to try and predict future price movements. The most basic technical indicator is probably the moving average. A moving average charts gives one a good visual impression of the direction the price of a currency has been moving in over the past five seconds, or five years, depending on the time frame you are trading in. Another popular group of technical indicators are the trending indicators. They are more refined than simple averages, but still attempt to predict future ups and downs in the price by analyzing past behavior, and then trying to project that into the future.
Long term traders prefer to call themselves investors, and most of the time they only look at fundamental factors to make buying or selling decisions. Banks and other investment houses do, however, often make use of basic technical indicators like the six month moving average of a currency.
There are a number of different chart types being used by traders. The simplest is the line chart, which basically just connects the closing prices to each other. A favorite of many traders is the so-called 'candlestick' charts. A candlestick chart shows both the opening and closing prices, and the highest and lowest prices for the day in a colorful bar type chart. Bar charts only shows the lowest and highest prices of the day.
Forex market trends is a subject that often causes heated debate among traders. There are as many experts as there are traders. Some swear by "the trend is your friend". Others do quite well with buying a solid currency like the Euro when its price is dropping, because they know it will sooner or later rise again. - 23221
posted by X - Men @ 7:52 AM
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