It's no secret that successful forex trading one of the top priorities for the trader is to determine the direction of the market, or in other words the trend. Trend - purposeful movement in the market (up or down) certain financial instruments - currency futures, stocks or indices. Knowing the direction of the trend, the trader increases their chances of opening a successful transaction. Experienced traders can determine the presence of a trend on the schedule of prices, or using a forex trend indicators.
In addition to the direction of the trend also has this property as the power of the trend. But, first things first. The market may be in three states - uptrend, downtrend, and no trend (lateral movement). The upward trend is characterized by ever increasing prices or quotations, ie the closing price of the previous candle below the closing price the next. In an uptrend, all market participants are trying to buy a growing asset. In a downtrend, the situation is reversed, each new candle closes below the previous price falls, and the players show the transaction to sell. When the market has a distinct trend, prices remain within a certain range. There trading strategies in such a market, but today we are not talking about them. Another important factor is to determine the strength of the trend, such as reduction of this parameter increases the likelihood of stopping or reversal of the current trend.
Forex trend indicators make it easy to determine the direction of the trend, as a novice and professional. Now we will describe the most popular indicators to determine the trend and the principle of their action. In fact, the trading terminal MetaTrader 4 forex trend indicators trend is in the Insert tab - Displays - trend.
One of the first indicator appears Moving Average (MA), which to this day is very popular among traders. MA- the average price for a specified number of days (20, 50, 100, 200). The greater the value of the period, the more long-term and is a global trend. Trend definition is as follows - if the price crosses the MA from the bottom up, the market is in a state of an uptrend, if the top down, down. Also used terms such as shopping zone/sales. Zone above the MA - shopping zone, below - the area of sales.
Indicator ADX (Average Directional Movement Index) - this forex indicator to determine the strength of the trend. The tool is useful both during the downtime of the market, and during the active trend. If the movement of prices in the market has no clear trend, the indicator LED will not exceed the value of 20. Rising above this mark indicates the presence of directed motion, the higher the bar, the stronger the trend and vice versa.
Some forex trend indicators are specific to the creators, for them, for example, to treat well-known and effective indicator Bollinger Bands, named after the creator John Bollinger. In fact it's just a few moving averages. But taken together, they provide a new tool to analyze the market and determine the trend. So, in an uptrend - the price reaches the lower boundary of the channel gives a buy signal. When descending on the contrary, when the price is reduced to the upper limit should be sold. There are times when the band contracts and obtain a narrow price range, in this case we should expect a sharp price movement in the near future.
Forex trend indicators are loyal assistant for traders, the knowledge of their functioning and proper use will help increase the amount of your trades, you can quickly and accurately determine the presence or absence of a trend, as well as its strength.Social button for Joomla