How To Specify A Current Trend On Forex? Part 1
All systems which are used in the trade by speculative traders on Forex, it is possible to divide conditionally on two categories. For the first category the trend direction in attention isn’t accepted, for all other systems determination of a direction of a trend is a part of it and such systems are in the majority.
Methods and indicators for trend determination exist in a great quantity if not to tell that the majority of all created indicators are able to do it. A trend is the expressed consecutive increase or lowering of quotations of the currency pair, displayed graphical. For what period of time it is lowering or increases? Two next tics, two opening prices of the next hour, day or monthly bars are compared? Or it is necessary to take some opening prices (closings) the last N bars in any specified time frame, to connect them, to smooth the received curve (a sliding average?) And to carry out its analysis. The exact and unique method of correct determination of a trend isn’t present, correct method will be always what it brings to you expectational result.
We take the hour schedule and we will look at it, visually, without indicators. We see a trend downwards, now we are switched to the day schedule and we see a trend upwards. What to do, where to trade?
Moreover, on any schedule of currency pair practically always it is possible to allocate two trends, upwards and downwards. The trend can be a necessary part of your trading system, but never sufficient. In the considered situation one trader will open a position on the sale, the second on purchasing simultaneously with the first and as a result both will close the positions with profit. Is it possible? Certainly! Now some beginners clutch at the head – their foundations fall, others with impatience read further – it seems, now there will be Grail. All is simple – both traders will close the positions at various times. When the first will close the position with profit, the position of the second will be unprofitable, but the loss won’t be fixed – its size within admissible for trading system. The time will pass, the position leaves in plus (the unrecorded loss hasn’t exceeded limits, put stops, the word of honor) and will be closed with profit. The first trader can finish at this time, for example, with profit two trades or more, having opened the second position after the first.
Each trader trades on different time frames, someone on 4-sentries schedules and its position there are in the market on the average some days, someone on day schedules in due course lives of a position some weeks or months. There are also scalpers, but the author is not the admirer of such strategy. It was already mentioned that it is important to close a position in time. Perhaps, it is the most important part of system – it is possible to open though «on a coin», and the main thing is in time to close positions.
Accordingly, if it is important to you to know a current trend that trend which you have specified, should be agreed that part of your trading system which is responsible for position closing conditions. Such conditions can be, for example, achievement by certain levels for a certain time interval or realization of any pattern, change of a trend or the fixed profit/loss in points. On an hour schedule downwards, and on day upwards, but it is occasion not to sell a trend, if you plan to close a position till the evening.
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