Thursday, January 24, 2013

Forex Trend Trading Info

If you've every tried to learn currency trading, you've come across info about Forex trend identification. I'm sure you've heard the common saying, "The trend is your friend". Without a doubt you've probably tried to use a Forex trend trading strategy or system. But lets be frank, trend trading is not as easy as you might have been led to believe.

You must first be able to identify a trending market and time frame. Then you need to have an entry strategy to join the trend at the best price. Obviously, you want to wait for a retracement to get the best price on your entry. But how do you know if a price move is a pullback or a completer reversal of market direction? As you can see, this can get complicated fast.

Here is a video that goes over identifying trending markets and how to distinguish between retracements and trend reversals. Check out the video to see how you can determine if a trend will continue in the same direction or completely change direction.



It should be quite clear, looking back on the charts, it is quite simple to draw trendlines and determine when to get into the market when the trend continues. You can also clearly see the difference between pullbacks and complete market reversals. The challenge is doing this in real time under live market conditions.

An important aspect touched upon in the video is that Forex trend trading depends a lot on the traders interpretation of the charts. This makes trading the trend dependent on the skills of the trader, and not a cut and dry, systematic strategy. If pulling the trigger and getting into the market is a struggle, trend trading can be extremely difficult.

Luckily for us, there is a service that makes identifying trending Forex markets very simple. When a currency pair is trending, you are alerted to the specific time frame of the strong trending pair. Essentially, identifying a trending currency and time frame is taken care of for you, which leads to many more profitable trend trading opportunities.

If you know a market is trending, then you can apply what you saw in the video to determine if the pullbacks are retracements or market reversals. If they are pullbacks, you can enter the market when the price action resumes in the current trend direction. If you think it is a reversal, you can stay out of the market all together, or try to make your profits on the reversal.

In conclusion, Forex trend identification can be very accurate, once you know the trending currency pairs and time frames. By using a service that alerts you to trending markets and time frames, half the battle is done for you. All you need to do is apply your Forex trend trading strategy to markets you already know are trending.

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