There are mainly 3 types of trends in terms of time measurement:
1. Main (long-lasting),.
2. Intermediate (medium-term) and.
3. Short-term.
These are discussed in further detail below.
1. Primary trend A main trend lasts the longest time period, and its life-span may vary between eight months and 2 years. This is the major trend that can be spotted easily on longer term charts such as the day-to-day, weekly or regular monthly charts. Long-term traders who trade according to the primary trend are the most concerned about the basic picture of the currency sets that they are trading, since essential aspects will provide these traders with an idea of supply and need on a bigger scale.
2. Intermediate trend Within a main trend, there will be counter-cyclical trends, and such price motions form the intermediate trend. This kind of trend could last from a month to as long as eight months. Understanding exactly what the intermediate trend is of great significance to the position trader who has the tendency to hold positions for several weeks or months at one go.
Short-term trend A short-term trend can last for a few days to as long as a month. Day traders are concerned with spotting and identifying short-term trends and as such short-term cost motions are aplenty in the currency market, and can supply significant profit opportunities within a very short duration of time.
No matter which amount of time you might trade, it is essential to keep an eye on and recognize the primary trend, the intermediate trend, and the short-term trend for a better overall photo of the trend.
In order to embrace any trend riding technique, you should first identify a trend direction. You can easily evaluate the instructions of a trend by taking a look at the rate chart of a currency set. 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, rates do not always go higher in an up trend, but still tend to bounce off locations of assistance, similar to rates do not constantly make lower lows in a down trend, however still have the tendency to bounce off locations of resistance.
There are 3 trend directions a currency set could take:.
1. Up trend,.
2. Down trendy gear trend or.
3. Sideways.
1. Up trend In an up trend, the base currency (which is the first currency sign in a set) values in value. If EUR/USD is in an up trend, it implies that EUR is rising higher versus the USD. An up trend is characterised by a series of greater highs and greater lows. Nevertheless in reality, in some cases the currency does not make higher highs, but still makes higher lows. Base currency 'bulls' take charge throughout an up trend, seizing the day to bid up the base currency whenever it goes a bit lower, thinking that there will be more purchasers at every action, thus pushing up the prices.
2. Down trend On the other hand, in a down trend, the base currency diminishes in value. If EUR/USD is in a down trend, it indicates that EUR is declining versus the USD. A down trend is characterised by a series of lower highs and lower lows, however similarly, the currency does not always make lower lows, however still has the tendency to make lower highs. The downward slope of lower highs is formed by the base currency 'bears' who take control during a down trend, taking every opportunity to sell due to the fact that they believe that the base currency would go down a lot more.
3. Sideways trend If a currency set does not go much higher or much lower, we can say that it is going sideways. When this takes place the costs are moving within a narrow range, and are neither appreciating nor diminishing much in value. 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 highly likely to have a net loss position in a sideways market especially if the trade has actually not made sufficient pips to cover the spread commission expenses.
For the trend riding strategies, we shall focus just on the up trend and the down trend.
Intermediate trend Within a main trend, there will be counter-cyclical trends, and such price movements form the intermediate trend. 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, costs do not always go higher in an up trend, however still tend to bounce off locations of support, simply like rates do not always make lower lows in a down trend, however still tend to bounce off locations of resistance.
Up trend In an up trend, the base currency (which is the first currency symbol in a set) values in value. Down trend On the other hand, in a down trend, the base currency depreciates in worth.