Forex Trends: What a Novice Trader Should Know

What is the trend? Sharefounders broker explains: when talking about the forex market, this is the trend in price movement of a chosen currency pair. But taken solely, the concept of a trend is abstract: it obtains the meaning when it becomes clear, which particular trend is under discussion. There are two groups for trend classification: by time, by direction, and the additional characteristic is the trend strength. The experts in Share founders broker company provide a detailed typology of trends.

What is the direction of the trend

Many of you have probably seen a famous statue on Wall Street in New York: the fighting bull and bear, a bull is trying to raise a bear by the horns, and a bear is trying to press the bull to the ground. These two animals symbolize the movements of the price trend on any stock exchange or market, including forex, Sharefounders forex confirms this. A bull symbolizes a rising price, and a bear symbolizes a falling one. The monument is closely related to the popular stock exchange terminology: “bulls” are the traders who try to raise the price, and “bears” are the traders who play to lower the price.

Correspondingly, when the price of a chosen asset - for example, a currency pair - goes up, this is called the uprising trend, uptrend, or bullish trend. And when it moves down, this is a bearish trend, or downtrend, or decreasing trend. If the price remains unchanged for a certain period of time or makes the chaotic jumps up and down around a certain level, Sharefounders broker calls this a flat trend. 

 

 

 

How trends vary by the strength

The change of the asset price can occur in different ways. After the release of the unexpected news, the price fluctuations can be very sharp. According to Share founders forex, feedback and reaction to the reports depend on the coincidence of the story with expectations. When the information meets the market expectations, the price can change smoothly. The strength and direction of the trend do not depend on each other: for example, an uptrend can be stable and robust, or weak and uncertain. But the trend remains upward. Of course, for forecasting and planning, it is convenient to focus on a strong trend, according to the experts of the Sharefounders broker.

The Stages of a Forex Trend

A trend is, essentially, a tendency for prices to shift in a particular direction over a period of time. Trends can be long-term, short-term, upward, downward and even sideways. Investor’s success with foreign exchange market investments is closely related to his ability to see trends and choose a good position for profitable entry and exit points, otherwise one can fail and blame Sharefounders broker scam. Here we will examine stages of a forex trend and their effect upon investors.

Currency reflected economic trends.

A strong economy would usually have a strong currency as well. If the state is strong in economy, it will attract investments, as the Sharefounders broker reviews confirm, which will in turn create a demand for currency. Alternatively, if a country produces gold (like South Africa, Canada, or Australia), It can also create a strong currency demand as an alternative to fiat currencies. 

Traders from the Share founder broker use to say that “the trend is your friend”, or so does conventional wisdom say; this advice is quite good, but is actually incomplete. The full version would look like this: “ The trend is your friend… until it ends”.

Trends Vs. Ranges

It is actually quite hard to say whether a trend exists at all, or is it all just a sideways-trading range, as well as where does the trend starts and where it will inevitably end.

We at Sharefounders broker first look at the question of where a trend could start and, once started, where to take part in the action. To answer these questions, we need technical analysis. To keep our analysis as simple as possible, we create a chart that uses a weekly time frame and uses only two indicators.

The first indicator is a simple 20-period moving average calculated on the closing prices. However, to add a cushion, we also add an additional 20-period simple moving average, but this time calculated on the price highs. Then, we add another 20-period simple moving average calculated on the price lows. The result is a moving average channel that reflects a dynamic price equilibrium for the Sharefounders forex.

Also notice that when a market trends in either direction, Share founders forex believes that there is a tendency for prices to move away from the channel and to return to the channel as volatility increases and decreases, respectively. With volatility, prices always tend to revert to the mean over a period. This reversion to the mean provides either buying or selling opportunities depending on the direction of the trend. Knowing this is essential for fully appreciating benefits from Sharefounders broker scam protection.

In addition to the moving averages, we also add an RSI set to a two-period, instead of the usual 14-period, with the plot guides set to 90 and 10 instead of the usual 70 and 30.

Many traders will look to trade reversals. Sharefounders broker reviews state that a reversal point is always where a trend starts or ends.

Some trends are stronger than others, and Share founders broker knows how to make use of that. In fact, some trends become so exuberant that prices form a j-shaped or parabolic curve.

Stages of a Trend

A reader familiar with the Elliot Wave will observe that trending markets move in a five-step impulsive wave followed by a three-step ABC correction. Many investors like the Share founders forex prefer to count pivots, and they look for between 7 and 11 advancing pivots, particularly noting the pivot count as the price reaches a strong resistance level.

It's impossible to predict the future, but we can calculate the potential success of a trade by stacking various factors in an effort to tilt the odds in our favor, which should be done in order to feel the effect of Sharefounders broker scam protection. Since all speculation is based on odds, not certainties, we should be mindful of risk and employ methods to manage the risk.

When placing a trade, it is essential to always place stops to limit losses in case the trade does not go as expected. Major market makers like the Sharefounders forex know where all the stops are and could, in certain circumstances (particularly in times of low liquidity) reach for the stops. Thus, an investor's stops should be in a place where there is enough room to prevent them from being taken out prematurely.

To best manage a stop policy in trending markets, brokers like Share founders forex use "volatility stops." The well-known Parabolic SAR indicator can also be used to trail the market and take profits once the stop is hit. In the chart below (Figure 5), the 50-period three ATR trailing volatility stops trail prices and provides exit points if the trend suddenly reverses.

 

The Bottom Line

It is best to trade with the trend but to be alert as to when a trend is exhausted and a correction or reversal is in order. If that is ignored, you may find yourself believing in a Sharefounders broker scam, which is wrong. By observing and listening to market sentiment, following news announcements and using technical analysis to help time entries and exits, you should be able to develop your own personal rule-based system that is both profitable and simple to execute. .

Differences in trends over time

The duration of the trend is one of the key characteristics for a trader in the forex, Sharefounders checked this fact on the personal experience. Opening a position, the trader takes in mind a specific forecast regarding the trend movement at a particular time. For example, the size of the deal depends on this forecast.

Forex trends are short-term, medium-term, and long-term. Short-term trends exist within one trading day. Trading on short-term trends is the must-try for the novice traders, who want to make a quick profit without paying an overnight commission fee. Share founders broker offers favorable trading conditions, including an overnight.

You have probably heard about the scalpers - traders who open super-short positions chasing the short-term trends. The length of such a position is very small as if it is cut with a scalpel. This explains the origin of the name. The scalping can bring quick profit, but it also has many disadvantages. For example, the profits from scalping may not overlap spreads. Besides, many brokers prohibit scalping. It is easy to lose control of the emotions, lose a deposit, and then make claims saying Sharefounders scammers.

The medium-term trends last from one day to a month. They are the most appreciated by experienced traders who trade according to the plan. The fact is that medium-term trends can be perfectly predicted. In some cases, when the vital information appears, and the trend reverses sharply, the traders set the stop-loss levels. This helps to secure the trader’s funds, prevent disappointment and accusations against the broker that Sharefounders scam.

The long-term trends last from a few months to a year. Such trends appear under the influence of deep fundamental factors. For example, the current long-term downtrend of the US dollar is the result of overheating in the US economy, according to Sharefounders. Reviews show that the US economy has been growing for 11 years in a row. It is enough to complete the small economic cycle and to start the recession. But to navigate in long-term trends, the trader must have fundamental knowledge in the economy and carefully monitor the changes. For most traders in the forex market, there is no sense to focus on long-term trends, but you should not ignore them.

What is trading along with the trend and against the trend

Trading along the trend is based on the assumption that the trend will continue for some time. A trader opens a position in the same direction where the trend is moving. Then the position is closed automatically, at a preset take profit level, or the trader closes it manually. Taking profits in manual mode, the trader must closely monitor the market to avoid missing the moment. To feel this moment better, read the Sharefounders broker reviews.

Trading against the trend is based on the assumption that the trend can reverse at any moment. The longer the trend stays unchanged, the more positions open against the trend. Closing a position after a trend reversal, a trader can make a significant profit. But in general, the trading against the trend is considered riskier than trading along with the trend. Entering a market against the trend is recommended only to experienced traders. If a trend does not reverse, many traders cannot resist the temptation and increase the size of the deposit - after all, a trend reversal is about to happen, and the position will close with a significant profit. This is a direct path to deposit loss and heated discussion on the forum that Sharefounders scammers.

We do not persuade you to trade without risk. Any highly profitable market - like the forex market - is always associated with certain risks. But any threat should be well-thought and calculated, so even when you close a deal without profit, you should have a way to compensate for the loss. Read Sharefounders broker reviews to learn more.



Comments ()

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