Forex Daily and 4 hour Trends

Last updated: December 20, 2024, 12:43 pm PST



Forex market trends

Trends study provides additional edge to any Forex trading strategy or system.

After identifying the main trend traders can use it to their advantage by taking positions on the market that follow the direction of the main trend and ignoring trades that contradict with it.

Current trends study is done once a day in the morning. Thus while daily trend remains applicable for the rest of the day, 4 hour trend suggestion carries absolute accuracy only for the next 4 hours after the signals update.

Needless to say that trend is you friend. If you know about a trend direction and trade with it, your winning trades percentage in Forex will rise.

Facts about market trends:

1. There are only 2 directions in which the market can move: Up and Down. For a trend trader it means that at any moment of time he can identify the prevailing trend and stick to it.

2. Even when the market is ranging, the dominant trend is still there, and many experienced traders use those quiet periods to re-set and add to their positions while always considering the dominant trend.

3. Try not to take trades against the major trend, unless you have a solid strategy or a good reason to take on risks. That said, don't try to predict a reversal by jumping in earlier, instead see the reversal and act upon it. Such actions require patient waiting, which experience traders are well familiar with.

4. If you happen to try counter-trend tactics, keep in mind that risks are more higher when you try to Buy in a downtrend versus attempts to Sell in an uptrend. The reason for that is that uptrends tend to progress at a slower pace and often have an extended reversals with many opportunities to correct/re-think your counter-trend position; while downtrends have a tendency to go develop much faster. Taking a counter-trend trades in a Downtrend as well as trying to predict a reversal is similar to trying to catch a falling knife.

5. If possible have few trading strategies in the tool box: one for trend trading, another for range bound trading.

6. While in a trend, allow your trading position to run for as long as the trend is there. It is easier said than done, buton the other hand, cutting your trades before they reach their maximum power is also not the best tactic to use in the currency speculation world.