There have been students asking in the Instantaneous FX Profits chat room about the existing trend for certain currency pairs. The concern of exactly what kind of trend is in place can not be separated from the time frame that a trend is in.
There are primarily 3 types of trends in terms of time measurement:
1. Main (long-term),.
2. Intermediate (medium-term) and.
These are discussed in more information below.
Primary trend A primary trend lasts the longest duration of time, and its lifespan may range in between 8 months and two years. Long-term traders who trade according to the primary trend are the most worried about the basic picture of the currency pairs that they are trading, considering that fundamental factors will offer these traders with a concept of supply and need on a bigger scale.
2. Intermediate trend Within a primary trend, there will be counter-cyclical trends, and such cost 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.
Short-term trend A short-term trend can last for a couple of days to as long as a month. Day traders are concerned with spotting and determining short-term trends and as such short-term cost motions are aplenty in the currency market, and can supply substantial profit opportunities within a very short period of time.
No matter which timespan you might trade, it is crucial to keep an eye on and recognize the primary 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 must first determine a trend direction. You can quickly assess the instructions of a trend by taking a look at the price chart of a currency pair. A trend can be defined as a series of higher lows and higher highs in an up trend, and a series of lower highs and lower lows in a down trend. In reality, costs do not constantly go higher in an up trend, however still have the tendency to bounce off locations of assistance, just like prices do not always make lower lows in a down trend, but still tend to bounce off areas of resistance.
There are three trend directions a currency pair could take:.
1. Up trend,.
2. Down trend or.
1. Up trend In an up trend, the base currency (which is the first currency symbol in a pair) appreciates in value. For example, if EUR/USD is in an up trend, it implies that EUR is rising new trendy gears higher against the USD. An up trend is characterised by a series of greater highs and greater lows. Nevertheless in reality, in some cases the currency does not make higher highs, however still makes higher lows. Base currency 'bulls' take charge throughout an up trend, seizing the day to bid up the base currency whenever it goes a bit lower, thinking that there will be more purchasers at every action, for this reason rising the rates.
2. Down trend On the other hand, in a down trend, the base currency diminishes in worth. For instance, if EUR/USD remains in a down trend, it suggests that EUR is decreasing versus the USD. A down trend is characterised by a series of lower highs and lower lows, however likewise, 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 during a down trend, taking every opportunity to sell because they believe that the base currency would go down even more.
3. Sideways trend If a currency set does not go much greater or much lower, we can say that it is going sideways. When this occurs the costs are moving within a narrow range, and are neither appreciating nor depreciating much in value. If you wish to ride on a trend, this directionless mode is one that you do not wish to be stuck in, for it is most likely to have a net loss position in a sideways market especially if the trade has not made enough pips to cover the spread commission expenses.
For that reason, for the trend riding techniques, we shall focus only on the up trend and the down trend.
Intermediate trend Within a main trend, there will be counter-cyclical trends, and such rate motions form the intermediate trend. A trend can be specified as a series of higher 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, however still tend to bounce off areas of support, just like rates do not constantly make lower lows in a down trend, however still tend to bounce off locations of resistance.
Up trend In an up trend, the base currency (which is the first currency symbol in a pair) values in worth. Down trend On the other hand, in a down trend, the base currency diminishes in value.