Skip to content

How to Identify and Trade with the Trend in Forex

I will be trading real money next month but unfortunately starting with just dollars account. September 10, at 3: Lai Wengkum April 5, at 1: These support levels resulted after the market began to retrace lower within the structure of the broader uptrend. Thanks Nial, you are the best….

The Daily Trend Trader For Forex for Trading On Tuesday, September 4, The FREE Daily Trend Trader Report helps to identify the current trend status of your favorite forex markets.

BREAKING DOWN 'Trend Trading'

Any Advice or information on this website is General Advice Only - It does not take into account your personal circumstances, please do not trade or invest based solely on this information. By Viewing any material or using the information within this site you agree that this is general education material and you will not hold any person or entity responsible for loss or damages resulting from the content or general advice provided here by Learn To Trade The Market Pty Ltd, it's employees, directors or fellow members.

Futures, options, and spot currency trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose.

No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in any material on this website.

The past performance of any trading system or methodology is not necessarily indicative of future results. Forex, Futures, and Options trading has large potential rewards, but also large potential risks. The high degree of leverage can work against you as well as for you. You must be aware of the risks of investing in forex, futures, and options and be willing to accept them in order to trade in these markets. Forex trading involves substantial risk of loss and is not suitable for all investors.

Please do not trade with borrowed money or money you cannot afford to lose. Any opinions, news, research, analysis, prices, or other information contained on this website is provided as general market commentary and does not constitute investment advice.

We will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from the use of or reliance on such information. Please remember that the past performance of any trading system or methodology is not necessarily indicative of future results. Checkout Nial's Professional Trading Course here.

Thabo Kotelo June 29, at 9: Lai Wengkum April 5, at 1: Thanks Nial, I start following your Lessons Reply. Krishnamoorthy March 31, at 8: Thank you very much for an excellent lesson Reply. Falola Jacob Olalekan March 1, at 7: Nomzamo February 12, at 6: Emeka Egwim January 24, at 9: Hendra Gimby December 28, at 3: Very useful article, good explanation about basic things.

Thanks for sharing Reply. SF Sharif Ahmed December 10, at 6: I think you are the best of all Reply. Thanks to you Nial. John Promise December 7, at 5: Ibrahim Busu December 6, at 6: Godspower Bernard December 6, at 5: William D'Arbe December 6, at 6: Thank you Niall, makes great sense..

Oliver December 6, at 3: Nial your the best…. Christian Walter December 5, at 9: Thank you, Nial and team. Sammy Ehis December 5, at Geoffrey Irwin December 5, at 8: Always valuable, helps me keep on track Reply. Mylo December 5, at 6: I can already imagine myself like a forex traider.

Such a cool post. Mamun December 5, at 4: This is a very good article….. Michael Tilghman December 5, at 1: Mike Coe December 5, at 6: A great reminder to check on the old TLS! Many thanks as always! Hypolite Uchechukwu Olua December 4, at 7: Jennifer Monks December 4, at 7: Enjoy all your articles Nial… great value and info.. Stephen Clarke December 4, at 6: Ibrahim Aamir Shafiq Zargar December 4, at 4: Aamir Shafiq Zargar December 5, at 2: Muchangi Mugo December 4, at 3: Thank you Sir for the insight Reply.

Galen Tarrence December 5, at 1: We will discuss a few trading techniques for spotting potential trends on the chart. Yes, we repeat this again, because price swings are the basic characteristic of every trend on a chart. If the tops and bottoms are increasing, we have a bullish trend. If the tops and bottoms are decreasing, then we have a bearish trend. In all other cases, we have a non trending environment, — a sideways market. Every two points on the chart could be connected with a straight line.

However, if a third point lines on the same line, then we have a tendency. In this manner, the trend confirmation usually comes after the price tests the trend at the third touch, and bounces from it.

When you see the bounce, you can enter an open a position attempting to catch a new trend leg. The arrows on the chart show the places where the price tests a bearish trend.

The green arrows indicate the price impulses and the red arrows show the corrective moves. The first two arrows pointing to tops on the trend are black.

These are the first two points used to draw a trend line. Now we would sit tight, and wait for price interaction at the third touch. The third arrow on the trend is blue. You will notice a strong bearish response off the trend line. This would be considered our trend confirmation and prepare us for a short position. The fourth arrow is also blue, because the trend is already confirmed. In this manner, a return and a bounce from the trend would give us another trading opportunity.

The two short trades in this case both create a trading opportunity, though the 3 touch in general will typically provide a better return to risk ratio. Volumes are helpful for identifying emerging trends. The reason for this is that in many cases the Forex pair will start trending after the volumes have increased. In this manner, the impulse trend moves appear during higher trading volumes.

Corrections on the other hand appear during lower trading volumes. When volumes are high, there is a lot of action in the market. Therefore, high volumes are offer insights into emerging trend impulse waves. This is the same trend from the second example in this article. Notice that the trading volumes pretty much respond to impulses and corrections as shown with the arrows above. The trend reversal comes afterwards. However, using the Volume indicator with the understanding of this limitation in mind, can assist you in your trend analysis nevertheless.

Since you are now familiar with the process of identifying trends on the chart, it is now time to discuss a way to take advantage of trading currency trends. We will now exhibit a trend trading strategy, which is straight forward and relatively easy to implement. We are going to use an assistant indicator to support our trend trading strategy. When the faster line breaks the slower line in bearish direction while being located above 0, we expect the price to start trending in bearish direction.

When the faster line breaks the slower line in bullish direction, while being located below 0, we expect the price to start trending in bullish direction. The MACD indicator also has a histogram. This histogram displays the exact difference between the faster and the slower line. If the histogram is positive, then the faster line is above the slower line — long signal.

If the histogram is negative, then the faster line is below the slower line — short signal. The Moving Average Convergence Divergence is also good for spotting divergence between price and the indicator. If the price is increasing and the MACD is decreasing, then we have a bearish divergence, which indicates that the trend is likely to reverse. The same is in force but in the opposite direction for a bullish divergence pattern.

If the price is decreasing and the MACD is increasing, then we have a bullish divergence. In this manner, we expect the bearish trend to switch to bullish activity. We can try to match signals from the MACD indicator and the potential emerging trend line and perform a volume analysis.

Imagine you have an upward price movement on the chart. At the same time, the MACD signals a bullish crossover below the 0, supporting the price increase. In this case, we can look to go long until we see a contrary signal from the MACD.

A stop loss order should be placed here below the recent swing bottom. The same technique is in force for bearish trends. If the price starts accounting for lower tops and lower bottoms, we use a bearish MACD crossover above the 0 in order to short a currency pair. The image below will show you how exactly this trading strategy works. The date is Jan 5 — Jan 8, This example starts with a bullish MACD crossover. Suddenly, the price action creates a higher top, breaking the level of its previous top.

This clues us in to a possible price increase, and after a short correction there is an opportunity for a long position on the chart. The stop loss order should be located right below the bottom, which should be used for the long position.

The price action continues with a new impulse on the chart.

3. Higher Highs, Higher Lows, Lower Highs and Lower Lows

The Forex market consistently attracts traders of all skill levels and strategies. With unconventional methods of economic stimulus becoming more conventional recently, strong trends have developed in the valuation of currencies. One common Forex strategy utilized is a trend following strategy. The Daily Trend Trader For Forex Bob Hunt Pattern Trapper Follow Following Pattern Trapper reports are compiled from sources believed to be reliable, but their accuracy cannot be guaranteed. How To Trade Trends In Forex – A Complete Guide By Nial Fuller in Forex Trading Strategies By Nial Fuller Last updated on June 18th, December 4th, | Comments We’ve all heard the saying “The trend is your friend”, and while it sounds nice it doesn’t really teach us anything about trading a trending market or how to identify one.