Currency trading for dummies- how to define a trend in foreign exchange trading

Currency trading for dummies- how to define a trend in foreign exchange trading

When determining the trend in your foreign exchange trading there are many different techniques that Forex traders use to determine the market direction. I will outline several techniques that are used including time frames which are a generally used for analysis. Trend confirmation is definitely the most common way to trade any market be it a forex day trading strategy or a long term trading strategy and is usually determined on one or two higher time frames.

There are many technical indicators used for trend identification and below is a quick look at some of the most common used:

Moving averages be it one or two used as a crossover strategy to determine the direction of the market

Peaks or troughs using historical key levels of resistance in the market these points could be determined on a daily chart down to a 1 minute chart depending on your strategy

Trend lines can also be used these are draw between two points on your chart and once there has been a close below the trend line in an uptrend this could represent a reversal in the market.

I personally am a trend trader and use a higher time frame to determine the trend, but this suits me as a trader and the key is simplicity. There is no need to use complicated methods in determining the trend. You just have to confirm the trend a define an entry and mange your trader accordingly. Foreign exchange trading is great for trend traders as historically it is a great trending market.

I have outlined some great starting points and here to be honest there are so many ways to determine a trend I just believe that the three methods above are the most simplest point to start and really is currency trading for dummies.

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