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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:

 

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


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  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


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  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.

About the Author

There is more information availabe at my blog at Fx trading Factory. Please visit and feel free to leave comments.

The Pickard Family-On The Dummy Line


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