There are primarily 3 types of trends in regards to time measurement:
1. Main (long-term),.
2. Intermediate (medium-term) and.
3. Short-term.
These are talked about in further detail listed below.
1. Primary trend A primary trend lasts the longest time period, and its life-span may vary in between eight months and two years. This is the significant trend that can be spotted easily on longer term charts such as the everyday, weekly or month-to-month charts. Long-lasting traders who trade inning accordance with the primary trend are the most concerned about the basic picture of the currency pairs 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 cost motions form the intermediate trend. Knowing exactly what the intermediate trend is of excellent importance to the position trader who tends to hold positions for several 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 worried with spotting and identifying short-term trends and as such short-term cost motions are aplenty in the currency market, and can supply substantial earnings opportunities within a very short duration of time.
No matter which amount of time you might trade, it is vital to monitor and determine the primary trend, the intermediate trend, and the short-term trend for a much better total image of the trend.
In order to embrace any trend riding strategy, you must first identify a trend direction. You can easily assess the instructions of a trend by taking a look at the rate 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, rates do not constantly go higher in an up trend, however still have the tendency to bounce off areas of support, just like costs do not constantly make lower lows in a down trend, however still have the tendency to bounce off locations of resistance.
There are 3 trend directions a currency pair 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 symbol in a pair) appreciates in worth. For instance, if EUR/USD remains in an up trend, it suggests that EUR is increasing greater versus the USD. An up trend is characterised by a series of higher highs and higher lows. However in real life, 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, hence rising the prices.
Down trend On the other hand, in a down trend, the base currency depreciates in value. 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.
Sideways trend If a currency set does not go much greater or much lower, we can state that it is going sideways. If you desire to ride on a trend, this directionless mode is one that you do not want to be stuck in, for it is extremely likely to have a net loss position in a sideways market particularly if the trade has not made enough pips to cover the spread commission costs.
Therefore, for the trend riding strategies, we will focus just on the up trend and the down trend.
Intermediate trend Within a main trend, there will be counter-cyclical trends, and such cost movements form the intermediate trend. A trend can be defined as a series of higher lows and greater highs in an up trend, and a series of lower highs and lower lows in a down trend. In truth, rates do not constantly go higher in an up trend, but still tend to bounce off areas of support, simply 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 very first currency symbol in a trendy gear pair) appreciates in value. Down trend On the other hand, in a down trend, the base currency diminishes in worth.
