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How to determine the trend?

I welcome everyone to the forex portal tradelikeapro.ru. In my video lessons on Price Action, I often repeat: “trade only with the trend”, “opening deals with the trend increases the chances of success of the transaction”, etc. But how is this trend to be determined?

What is a trend?

Trend is the general direction of market movement. No market is moving strictly in a straight line, so we need to identify a general trend: upward or downward.

Opening a trade in the direction of the trend helps increase the chances of success. Of course, the Price Action setups against the trend also work, sometimes quite well, but trading only with the trend, we can be more calm, because significantly reduces the risk of loss.

There are a huge number of forex indicators, systems and theories to determine the current direction of a trend in the market. But trading on Price Action implies precisely the rejection of indicators, monitoring the market situation on the basis of only the behavior of the main indicator - the price itself. Therefore, when determining a trend, we will be guided only by price, based on the most classic interpretation of trends in the Forex currency market.

Uptrend

Uptrend is a series of rising peaks and troughs.

Based on this rule, we determine whether there is a bullish trend in the market. As soon as the rule of increasing highs and lows is violated - we look for opportunities for sales.

In the ascending market after the breakdown of the previous low, we can consider a possible change in the trend to bearish.

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Downtrend

Downtrend is a series of dropping peaks (highs) and troughs (lows).

From here we derive the rule:

We can talk about a downtrend reversal when the market broke through the previous high.

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I don’t understand what the trend is now, how to be?

Quite an important point - if you can’t understand what the trend is now, and this often happens during periods of consolidation, when the market moves in a horizontal direction, then simply do nothing.

Many people make the mistake of believing that they should always trade. No way. If you take only “beautiful”, clear and understandable setups, it will be much more profitable than trying to grab every point. Be selective in your transactions, do not understand where the market is moving now - do not trade, wait for the situation to be clarified.

When is the best time to enter the market?

As we said at the very beginning of this article, the market does not move in a straight line. There will always be periods of pullbacks and consolidations. It is precisely in such periods that one should enter a position, being guided by the main trend direction.

Yes, sometimes Price Action setups are formed on impulsive movements and work out well, but entrances on pullbacks are more secure and ultimately profitable.

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That's all, thanks for your attention. And remember - “Trend is your friend” 🙂

Watch the video: How to identify the trend (November 2019).

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