Trading System: The trend is your friend! – Analysis and Forecast – January 3, 2024
A popular trading expression is “the trend is your friend.” This expression remains timeless. Because trends are very important in every field. trading plan. Forex trend lines can be seen in almost every chart analysis due to their usefulness and simplicity. This article provides traders with an in-depth guide on what to do. trend line We will teach you how to draw it and how to apply it when trading.
Why do your friends follow trends in forex trading?
The best traders will admit that there is no single one. trading strategy It has a 100% win rate. This statement may seem obvious, but this is why traders should look for anything that can increase their chances of winning a trade. One such candidate is the trend.
Learning how to trade in an imperfect world is very important. Trend trading is a simple way to hide. strategy Identify the strongest trends in the market and eliminate flaws. As you can see below, a sell transaction can happen even if a trader enters while the market is temporarily rising.
The prevailing trend (downward) was strong enough to turn losers into winners depending on where the stop loss was placed.
If you look at the chart below, you’ll see that there are more. pip Available in direction tendencyIt’s against the trend.
How to Determine a Trend
To check trends price chart Select your desired currency pair with 100-200 candles. So, answer the question of which direction prices are generally moving.
If the trend is upward check direction Look for a series of higher highs and higher lows on the chart. A valid uptrend would look similar to the chart below.
Notice that each successive high is higher than the last high and each low is higher than the previous high.
But in reality, all trends will come to an end. So, once a series of lower highs and lower lows are established, this uptrend changes into a downtrend. The chart below shows when the market is moving lower than previous lows and traders should be on the lookout for a trend reversal.
If the trend is down, look for a series of lower highs and lower lows on the chart to confirm the downtrend. Below is a chart of a valid downtrend.
This downtrend changes into an uptrend when a series of higher highs and higher lows begin to form. The image below shows a trend reversal.
It is important to note that there are no specific rules for identifying highs and lows to use in trend analysis. The idea is to choose the clearest example of an uptrend or downtrend to trade. Insist on finding forex pairs in a trend that is so obvious that even a 10-year-old can identify the direction of the trend from across the room. If you are unsure of the direction of the trend, move to the next pair with a clear identification.
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