Identify the trend to trade like a pro trader

by ETF Base on February 22, 2020

In the Forex market, there are many analyzing tools, if you are new you will get confused by the different tools. To trade in the Forex market profitably, you need to know and understand each of the tools and how do they work. So, what are the key things that you need to analyze to become a skilled trader? The first thing that you need to focus on is the trend. There is a saying in the market, the trend is your friend. Unless you learn to trade with the major trend, things will be hard. You won’t be able to make consistent profit from this market.

To achieve success in trading, traders need to analyze the trends. The analyzing period of the trends may seem to be time-consuming but it’s one of the key factors every trader should know to make money in the Forex market.

Why Forex trend is important

By observing the trend of the market you can know about the price behavior, you can also observe the overall increase or decrease of the price behavior. If you can follow the trend of the market, you will learn and understand more precisely to trade profitably. The Forex market mainly has two types of trend tendencies known as the bullish and the bearish trend. However, you might see the price confined by an upper and lower barrier. This phenomenon is known as the ranging market.

What is a bullish trend?

The bullish trend is referred to as the upward trend for the overall rise in the price. During a bullish trend, the price connects to the bottom of the chart. A bullish trend act as support. People usually invest their money during the bullish period since the price of a stock or a certain asset rally higher. If you spot a bullish trend in the market, look for critical support. Even the elite traders at Saxo markets execute long orders when they find the price is rallying.

What is a bearish trend?

When the price of a certain asset drops for an extended period, we call it a bearish trend. During the bearish trend, the traders in United Kingdom looking for a short trade setup. Learn about the bearish price action signal so that you can trade the critical resistance level with a high level of accuracy. But when you trade in favor of the major trend, make sure you use the higher period to analyze the market data. Without doing that, it will be nearly impossible to make decent progress in the trading industry.

Developing a trend trading strategy

To trade the major trend, you need to develop a unique strategy. The naive traders mostly rely on indicators, EAs and bots to trade the trend. But this is not going to work unless you learn to trade the find the trend line. To find the bullish trend line, you have to connect three higher lows. On the contrary, the bearish trend line is drawn by connecting three lowers highs in the market. Most of the time the price respect this level and the traders get unique profit-taking opportunities.

Before you start trading the real money, you should create a demo account. Use the demo account to develop your trend trading strategy. Without following all the basic rules of investment, it will be tough to make a profit from this market. During the strategy development process, you need to adjust the trading method based on your trading result.

Dealing with the losing orders

Learning about the trend trading method doesn’t mean you will win all the trades. Try to focus on the long term goals and trade the market with predefined stops. Stop taking more than 2% risk even though you can trade this market with rational logic.

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