The research in the Forex market is only value if you can indentify the Trends. With this knowledge You become a profitable Forex Trader.
The Forex market is generally known by its high liquidity and great volume of transactions occurring during mainly of its long trading week. These characteristics substantially contribute to make the Forex market a very trendy market with few trend-less periods.
But what does this mean to the Forex trader? Mainly this trendy typical of the currency markets means that there will be plenty of opportunities for the trader to find profitable trades during the day.
As you start analyzing forex charts you will understand that the market often display’s some very familiar patterns of price development, this is; trends; and you will notice that once a pattern is established, it becomes the most probable course of future price action until the market changes. Giving you a good forecast of what comes next with the currency prices.
There are two types of markets which will turn into very important for you to identify and understand; these are: trending and, the a lesser amount of frequent, trend-less markets. Each market type has two specific patterns which you will also notice over time.
A Trending market is defined as a steady, elongated price movements with a smaller amount than a 45 degree angle with occasional pauses, profit taking, or resting periods.
In a Trending market, you will notice two main and fairly evident patterns:
Uptrends – A pattern of higher highs and higher lows.
Downtrends – A pattern of lower lows and lower highs.
There is also the a smaller amount frequent kind of market, this is a Trendless market with changeable price movements which are often steep (greater than 45 -degree angle) and cannot sustain and therefore must reverse. Although the movements can move many points in a little period of time, they are constantly and speedily oscillating with the consequence that they often result in very little net price movement over time.
In a Trend-less market, you will find these main patterns:
Choppy – An erratic pattern of higher highs and lower lows.
Sideways – A narrow pattern of lower highs and higher lows.
While up-trend and down-trend periods will offer excellent trading results most of the time, choppy markets often create stop outs, this is they set in motion your stops by constantly overshooting your projected resistance level but without never really crossing too far from this level; while sideways markets generatefor little in either direction making them hard to trade and to build any profit during these periods.
As always in Forex, your main trading objective is to get into profitable trades most of the time and a trending market is the great situation to find this profitable trades by riding the trends until you create your target profit objective of the day.
Exactly in the time we are now with all the movements on the investment market, the bank crashes and the governments supports, it is a very special situation. If you observe the market trends you will have the chance to make a big profit.