RSS Feed

Related Articles

Related Categories

Trading the trend in forex trading

27th June 2021 Print

Trends define the ability of prices and market values to shift and move upward, downwards over a certain period. Forex operates with over 5 trillion USD trading volume of a single day since April 2016, so it is valid to assume that the trends in the Forex market keep changing and are prone to fluctuations.

The fluctuations give a direction to every trade on Forex. Following that, a successful trader is able to identify the forthcoming trends and patterns. Consequently, they are able to suit their trades for optimal and profitable entry/exit points.

While people find trend reading easy, it isn’t always the case. Trend trading means using the previous market trends to capture the potential fluctuations in future market movements. It focuses the majority of the movement rather than reaching the top or bottom.

Trading the Trade in Forex

The Forex market is huge in terms of the number of transactions, volumes, and total market cap. It allows rather larger fluctuations that sometimes leave small investments in a pool of profit while causing intense shortfalls in the hands of high trade holders.

Minor fluctuations and trends are the times when the day traders try to capture as much profit as possible. As these last for a shorter duration, they are a general target of the day traders. Relative to these micromovements, the secondary trends last longer.

Despite the high fluctuations, there are potentially endless opportunities to exploit in the wide Forex market. So, here’s the level of trend capitalization that day, intermediate, and long-term traders exploit.

- Day Traders – they capture minor trends that do not range more than hours to days.

- Intermediate Traders – they target secondary trends in their respective markets, which may last from a few days to several weeks.

- Long-Term Traders – they are likely to capture trends that last weeks to months and are larger in ranges. 

Learning where the markets are heading can reveal rewarding answers and help you plan the next successful trades accordingly. It is an art of Forex trading itself, and becoming successful requires understanding the market trends.

How Can You Improve Trading the Trend in Forex?

Unlike many traders, there are some who use technical analysis and effective tools to observe the trends and layout a projection of their own. We have listed some of the tools below, and you can use them to learn, observe, and identify market trends on your own.

Utilizing Patterns

Chart patterns are instrumental to the success of the trend identification process. The two most common types of chart patterns in use are the descending and ascending staircases, respectively.

A chart pattern suggests an uptrend when the highs and lows are both in the upper range. Hence, traders refer to is a “bullish” trend. Traders continue to trade under such a market trend until the highs start to fall, i.e., uptrend ends.

On the other hand, when the lows and highs both fall in the lower range, it is a downtrend –hence the term “bearish” market. This is an optimal trading opportunity for the short-side phase traders of the market.

Using Trend Indicators

One of the most common trade indicators is the moving average that can potentially reveal excellent trend identification results and trading opportunities. While it can yield good results when used correctly, indicators, as well as chart patterns, can cause failures during consolidation in the market.

Trend Lines for Trend Trading

Trend lines are the simplest to use and require a proper chart to depict values. Trend lines can produce clear visuals regarding whether there is a downtrend or an uptrend in the market.

Expert chartists draw the trend lines using angles according to the three directions that the trends can move in: downward, upward, and sideways. A rising slope of a trend line illustrates that there is an uptrend while the market may be moving upwards.

Similarly, a declining gradient of the slope will entail that there is a downtrend, and the market may be falling. When you adjoin two low points on the chart, you reveal a positive trend line (i.e., uptrend). Conversely, when you adjoin two highs on the chart, you reveal a negative trend line (i.e., downtrend). 


Trading the trend may be profitable and highly successful. However, you should never ignore the fact that trends exhaust and reverse in no time when it comes to external factors. Therefore, learning and knowing how to keep a tab on your respective market trends can help you become successful in your trades.

Learning from others’ strategies and using them is a good move, but developing your personal system for trend identification and trading can go a long way.

More Photos - Click to Enlarge