There are primarily 3 kinds of trends in regards to time measurement:
1. Main (long-term),.
2. Intermediate (medium-term) and.
3. Short-term.
These are discussed in further detail below.
Main trend A main trend lasts the longest duration of time, and its life expectancy might vary in between 8 months and two years. Long-term traders who trade according to the main trend are the most worried about the essential photo of the currency pairs that they are trading, because essential elements will offer these traders with an idea of supply and demand on a bigger scale.
Intermediate trend Within a main trend, there will be counter-cyclical trends, and such rate motions form the intermediate trend. Understanding what the intermediate trend is of fantastic significance to the position trader who tends to hold positions for a number of 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 concerned with spotting and recognizing short-term trends and as such short-term cost motions are aplenty in the currency market, and can offer significant earnings opportunities within an extremely short duration of time.
No matter which time frame you might trade, it is crucial to keep track of and identify the primary trend, the intermediate trend, and the short-term trend for a much better overall image of the trend.
In order to adopt any trend riding strategy, you need to first identify a trend instructions. You can easily determine the instructions of a trend by looking at the rate chart of a currency pair. A trend can be defined as a series of greater lows and higher highs in an up trend, and a series of lower highs and lower lows in a down trend. In reality, prices do not always go higher in an up trend, but still have the tendency to bounce off locations of assistance, much like prices do not constantly make lower lows in a down trend, but still have the tendency to bounce off areas of resistance.
There are three trend directions a currency pair might take:.
1. Up trend,.
2. Down trend or.
3. Sideways.
1. Up trend In an up trend, the base currency (which is the very first currency sign in a pair) appreciates in value. If EUR/USD is in an up trend, it suggests that EUR is increasing higher against the USD. An up trend is characterised by a series of greater highs and greater lows. Nevertheless in reality, sometimes the currency does not make higher highs, however still makes higher lows. Base currency 'bulls' take charge throughout an up trend, taking the opportunities to bid up the base currency whenever it goes a bit lower, thinking that there will be more purchasers at every action, for this reason pushing up the prices.
Down trend On the other hand, in a down trend, the base currency diminishes in value. The down slope of lower highs is formed by the base currency 'bears' who take control throughout a down trend, taking every chance to sell since they think that the base currency would go down even more.
Sideways trend If a currency pair does not go much greater or much lower, we can state that it is going sideways. If you want to ride on a trend, this directionless mode is one that you do not want to be stuck in, for it is really likely to new trendy gears have a net loss position in a sideways market specifically if the trade has not made adequate pips to cover the spread commission costs.
For that reason, for the trend riding strategies, we shall focus just on the up trend and the down trend.
Intermediate trend Within a primary trend, there will be counter-cyclical trends, and such cost motions 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 reality, costs do not constantly go higher in an up trend, but still tend to bounce off locations of assistance, just like costs do not constantly make lower lows in a down trend, but still tend to bounce off locations of resistance.
Up trend In an up trend, the base currency (which is the first currency symbol in a set) appreciates in value. Down trend On the other hand, in a down trend, the base currency diminishes in value.
