Beginning forex trading is a no big deal but what matters is how well you execute it and attain success in it. Remember forex trading or dealing in any other financial asset is not that simple as you tend to have a good knowledge and be aware of some strategies you need to adopt during your trading activity. Two popular strategies in forex trading are range trading and trend trading which most of the traders adopt during forex trading. Let us understand and go through some basics of trend trading. Trend trading is long term strategy where traders take positions with the cycle of price movements in a particular direction which can be either upward or downward. Generally traders get a chance to establish positions take can witness larger price movements over long term to avoid any kind of losses that can occur because of price breakouts from a given range thus securing them to certain extent.
Trend trading is not that easy and thus requires a lot of patience from traders as well as some confidence in the trend that they have identified should continue. However traders also need to be aware about the fact that trends can be suspended or even reversed by actions like government interventions in markets or may be because of change in market sentiments. This way traders need to be prepared for it as well as well aware of this fact. Trader can identify a trend using technical charts where trends are usually marked by a succession of higher or lower trading ranges. In trend scenario an uptrend is generally a situation where the market makes a series of higher ups and higher lows while a downtrend is the one where market makes a series of lower highs and lower lows. Now these trends may ideally continue for days, weeks, or months depending upon market conditions which can change at any time or interval.
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Identifying a trend is a bit difficult and most of the times traders are not able to identify the absolute beginning or the end of a trend however a trader may get into a trade a bit early enough to take a position ahead of the middle of a trend and then get an advantage to ride the upward or downwards towards the trend completion. It is certainly known that the future of any trend is never 100% certain and thus a trader can lose if the trend changes direction. Despite all the tools and trackers it is a bit difficult to look at the future of the trend and thus one popular way to lock in profits and protect self from any kind of losses due to trend reversal is to set stop loss. A stop loss is defined as a pre set order to buy or sell a security in case its price moves below or above a predetermined level thus securing the trader. This function basically acts as an insurance against losses. One thing which is important here is to carefully consider the level at which stop loss should be set.
Trading in trend is completely from trader to trader and while catching a trend trader needs to do some special observation of the market conditions and go through and analyse the technical indicators well on some trading platforms which can be of great help. These are some commonly used technical indicators in trend trading like Moving Averages, Regression Channel, Ichimoku Cloud, Speculative Sentiment Index and few more. You may experience trend trading at popular platforms such as DailyForex or more.