Forex Market Trends - The Holy Grail Of Trading?
If you talk to a day trader about Forex market trends, he will shrug and tell you there is no such thing. Swing traders and long term traders know better. They will explain to you that there is a fortune to be made in "trading with the trend". What is the truth? Or are both groups wrong, or perhaps both are right?
Day traders make or lose money in a very short period of time. For them a long term trend would be a price movement that lasts from 10:00 to 12:00 in the morning. Day traders often buy and sell forex within the space of a few minutes. If you consider the fact that you have to pay commissions on trading this type of market is best left to people who know what they do. However, because day trading is quite exciting one often finds that beginners are attracted to this type of market. They very often lose a lot of money within a very short period of time.
Swing traders have a somewhat longer time frame in which they trade. For them a trend in the market is an upward or downward price movement that goes on for a few days or weeks. Although it's very easy to look at a chart and see that the price has been going up for a week, using that as a basis to assume it will be going up for another week might just be slightly flawed.
The third category of trader is the long term trader. They are not really traders at all, but should actually be called investors. They would only buy a currency if underlying economic factors (fundamental factors) indicate that the currency is on a long term upward trend. If the reverse is true, they would sell it (or go short in trading lingo). They do use technical indicators from time to time, but then over a much longer time frame than either day traders or swing traders.
Swing traders often use both technical analysis and what is called 'fundamental analysis' to make buying or selling decisions. Fundamental analysis looks at all the underlying economic factors that influence the movement of a currency. One example is inflation. When inflation of one country is higher than that of another, the currency of the first country will depreciate to adjust for this - all other things being equal!
Another type of analysis, used more by swing traders and long term traders is called fundamental analysis. In fundamental analysis one would try to identify 'fundamental' economic factors that will have an effect on the future price movements of a particular currency. One such example is the effect interest rates have on the value of a currency. If the interest rate goes up, it will have an effect on the value of that country's currency which could not be predicted by looking at technical indicators alone.
Chart used by traders vary from the simple line chart, to candlesticks and bar charts. A line chart is basically just a line connecting today's closing price with that of the previous day and so forth. Bar charts show both the opening price and the closing price. The hugely popular candlestick charts display a lot more information: highest prices, lowest prices, as well as opening and closing prices.
Forex market trends is the subject of many debates, numerous studies, and a lot of conjecture. - 23226
Day traders make or lose money in a very short period of time. For them a long term trend would be a price movement that lasts from 10:00 to 12:00 in the morning. Day traders often buy and sell forex within the space of a few minutes. If you consider the fact that you have to pay commissions on trading this type of market is best left to people who know what they do. However, because day trading is quite exciting one often finds that beginners are attracted to this type of market. They very often lose a lot of money within a very short period of time.
Swing traders have a somewhat longer time frame in which they trade. For them a trend in the market is an upward or downward price movement that goes on for a few days or weeks. Although it's very easy to look at a chart and see that the price has been going up for a week, using that as a basis to assume it will be going up for another week might just be slightly flawed.
The third category of trader is the long term trader. They are not really traders at all, but should actually be called investors. They would only buy a currency if underlying economic factors (fundamental factors) indicate that the currency is on a long term upward trend. If the reverse is true, they would sell it (or go short in trading lingo). They do use technical indicators from time to time, but then over a much longer time frame than either day traders or swing traders.
Swing traders often use both technical analysis and what is called 'fundamental analysis' to make buying or selling decisions. Fundamental analysis looks at all the underlying economic factors that influence the movement of a currency. One example is inflation. When inflation of one country is higher than that of another, the currency of the first country will depreciate to adjust for this - all other things being equal!
Another type of analysis, used more by swing traders and long term traders is called fundamental analysis. In fundamental analysis one would try to identify 'fundamental' economic factors that will have an effect on the future price movements of a particular currency. One such example is the effect interest rates have on the value of a currency. If the interest rate goes up, it will have an effect on the value of that country's currency which could not be predicted by looking at technical indicators alone.
Chart used by traders vary from the simple line chart, to candlesticks and bar charts. A line chart is basically just a line connecting today's closing price with that of the previous day and so forth. Bar charts show both the opening price and the closing price. The hugely popular candlestick charts display a lot more information: highest prices, lowest prices, as well as opening and closing prices.
Forex market trends is the subject of many debates, numerous studies, and a lot of conjecture. - 23226
posted by X - Men @ 2:27 AM
0 Comments
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home