Do forex market trends even exist? Market trends that can easily be picked up and be used to make a large amount of money over a short period of time? Day traders will no doubt say there is no such thing - the market is 100% unpredictable over any period longer than one day. Swing traders and long term traders will disagree.
Day traders make or lose money in a very short period of time. For them a long term trend would be a price movement that lasts from 10:00 to 12:00 in the morning. Day traders often buy and sell forex within the space of a few minutes. If you consider the fact that you have to pay commissions on trading this type of market is best left to people who know what they do. However, because day trading is quite exciting one often finds that beginners are attracted to this type of market. They very often lose a lot of money within a very short period of time.
Another type of trader is the so called swing trader. Swing traders do not trade as often as day traders. They wait for a medium term trend in the market, and then either go long or short on a particular currency. They will stay in the trade for as long as the trend lasts, and try to get out just before it reverses. This of course is more of an art than a science, since there is nobody that can actually predict when the market will turn around. External factors can cause it to turn around within a matter of hours.
Day traders rely heavily on what is called "technical indicators" to help them make trading decisions. Most of them have sophisticated charting software to visually represent market movements. The simplest technical indicator is probably the moving average. If you draw a basic chart, showing when the price of the currency moves above or below the moving average, it can be used as a trading signal to buy or sell that currency. 'Trending indicators' is another group of indicators that are highly popular. Many traders swear you can in the first place pick up a trend in the market with one of these, and also predict when the trend will run out of steam.
Swing traders often use both technical analysis and what is called 'fundamental analysis' to make buying or selling decisions. Fundamental analysis looks at all the underlying economic factors that influence the movement of a currency. One example is inflation. When inflation of one country is higher than that of another, the currency of the first country will depreciate to adjust for this - all other things being equal!
Another type of analysis, used more by swing traders and long term traders is called fundamental analysis. In fundamental analysis one would try to identify 'fundamental' economic factors that will have an effect on the future price movements of a particular currency. One such example is the effect interest rates have on the value of a currency. If the interest rate goes up, it will have an effect on the value of that country's currency which could not be predicted by looking at technical indicators alone.
Three popular chart types used by traders are line charts, candlestick charts, and bar charts. Line charts simply connect closing prices over a period of time. Candlestick charts show opening and closing prices, as well as the high and low point for the day in a colored bar. Monochrome bar charts only show the opening and closing prices.
Forex market trends is the subject of many debates, numerous studies, and a lot of conjecture.
Day traders make or lose money in a very short period of time. For them a long term trend would be a price movement that lasts from 10:00 to 12:00 in the morning. Day traders often buy and sell forex within the space of a few minutes. If you consider the fact that you have to pay commissions on trading this type of market is best left to people who know what they do. However, because day trading is quite exciting one often finds that beginners are attracted to this type of market. They very often lose a lot of money within a very short period of time.
Another type of trader is the so called swing trader. Swing traders do not trade as often as day traders. They wait for a medium term trend in the market, and then either go long or short on a particular currency. They will stay in the trade for as long as the trend lasts, and try to get out just before it reverses. This of course is more of an art than a science, since there is nobody that can actually predict when the market will turn around. External factors can cause it to turn around within a matter of hours.
Day traders rely heavily on what is called "technical indicators" to help them make trading decisions. Most of them have sophisticated charting software to visually represent market movements. The simplest technical indicator is probably the moving average. If you draw a basic chart, showing when the price of the currency moves above or below the moving average, it can be used as a trading signal to buy or sell that currency. 'Trending indicators' is another group of indicators that are highly popular. Many traders swear you can in the first place pick up a trend in the market with one of these, and also predict when the trend will run out of steam.
Swing traders often use both technical analysis and what is called 'fundamental analysis' to make buying or selling decisions. Fundamental analysis looks at all the underlying economic factors that influence the movement of a currency. One example is inflation. When inflation of one country is higher than that of another, the currency of the first country will depreciate to adjust for this - all other things being equal!
Another type of analysis, used more by swing traders and long term traders is called fundamental analysis. In fundamental analysis one would try to identify 'fundamental' economic factors that will have an effect on the future price movements of a particular currency. One such example is the effect interest rates have on the value of a currency. If the interest rate goes up, it will have an effect on the value of that country's currency which could not be predicted by looking at technical indicators alone.
Three popular chart types used by traders are line charts, candlestick charts, and bar charts. Line charts simply connect closing prices over a period of time. Candlestick charts show opening and closing prices, as well as the high and low point for the day in a colored bar. Monochrome bar charts only show the opening and closing prices.
Forex market trends is the subject of many debates, numerous studies, and a lot of conjecture.
