There are primarily 3 kinds of trends in regards to time measurement:
1. Main (long-lasting),.
2. Intermediate (medium-term) and.
3. Short-term.
These are discussed in further detail below.
Main trend A main trend lasts the longest period of time, and its lifespan may range in between eight months and two years. Long-term traders who trade according to the main trend are the most worried about the fundamental picture of the currency sets that they are trading, considering that basic aspects will provide these traders with a concept of supply and need on a larger scale.
2. Intermediate trend Within a primary trend, there will be counter-cyclical trends, and such price movements form the intermediate trend. This type of trend could last from a month to as long as 8 months. Understanding what the intermediate trend is of great significance to the position trader who tends to hold positions for numerous weeks or months at one go.
3. Short-term trend A short-term trend can last for a few days to as long as a month. It appears during the course of the intermediate trend due to global capital flows reacting to everyday financial news and political situations. Day traders are concerned with spotting and recognizing short-term trends and as such short-term rate motions are aplenty in the currency market, and can provide substantial revenue opportunities within an extremely short amount of time.
No matter which amount of time you might trade, it is important to keep track of and identify the main trend, the intermediate trend, and the short-term trend for a better overall photo of the trend.
In order to adopt any trend riding technique, you need to initially identify a trend instructions. You can easily gauge the instructions of a trend by taking a look at the cost chart of a currency pair. A trend can be specified as a series of greater lows and greater highs in an up trend, and a series of lower highs and lower lows in a down trend. In reality, prices do not constantly go higher in an up trend, however still tend to bounce off locations of assistance, just like rates do not always make lower lows in a down trend, however still tend to bounce off locations of resistance.
There are three trend directions a currency set 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 symbol in a pair) appreciates in value. If EUR/USD is in an up trend, it suggests that EUR is rising higher versus the USD. An up trend is characterised by a series of greater highs and higher lows. However in reality, in some cases the currency does not make higher highs, but still makes higher lows. Base currency 'bulls' take charge during an up trend, seizing the day to bid up the base currency whenever it goes a bit lower, believing that there will be more purchasers at every step, for this reason pushing up the rates.
Down trend On the other hand, in a down trend, the base currency diminishes in worth. The downward slope of lower highs is formed by the base currency 'bears' who take control throughout a down trend, taking every chance to offer since they think that the base currency would go down even more.
3. Sideways trend If a currency set does not go much higher or much lower, we can state that it is going sideways. And are neither appreciating nor depreciating much in worth when this occurs the rates are moving within a narrow range. If you wish to ride on a trend, this directionless mode is one that you do not want to be stuck in, for it is most likely to have my trendy gears a bottom line position in a sideways market particularly if the trade has not made sufficient pips to cover the spread commission expenses.
Therefore, for the trend riding techniques, we will focus only on the up trend and the down trend.
Intermediate trend Within a primary trend, there will be counter-cyclical trends, and such rate movements form the intermediate trend. A trend can be specified 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 always 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 areas of resistance.
Up trend In an up trend, the base currency (which is the very first currency sign in a pair) values in worth. Down trend On the other hand, in a down trend, the base currency depreciates in worth.