Introduction to technical analysis

Introduction to technical analysis

What is FOREX trend trading?

Analyzing prices and reading chart patterns can help FOREX traders to better predict where prices may be headed in the future. Following trends in the FOREX markets is a popular strategy. Trends last for a very long time in the currency markets. In fact they can last for years. It is possible to make money trying to pick tops and bottoms on a very short-term basis, but you will probably make a lot more money and save a lot of headache and stress, if you just follow the trends.

How to draw a trend line? You need two points to make the line and then, once it is touched the third time you will have a trend line.

We need 3 points to draw a trendline We need 3 points to draw a trendline

When referring to FOREX trends it is important to realize, that you are trading currencies of different countries. Countries get progressively better or progressively worse; they do not get better, worse, better, worse. That is why trends usually last for a very long time.

Traders say that the trend is your friend. Yes, the trend is your friend until the trend is over. FOREX markets are such high level leverage markets that when the trend turns it turns very quickly.

The trend is broken by a massive fall The trend is broken by a massive fall

The more significant the trend line is, the harder it is to break it. No market is always black or white. Trends turn and identifying them is an important part of your investment strategy.

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Investments can fall and rise. You may get back less than you invest. CFDs are higher risk because of leverage. Be sure you understand the risks.
Risk warning
Investments can fall and rise. You may get back less than you invest. CFDs are higher risk because of leverage. Be sure you understand the risks.