What's Trend in Forex? - Definition of a Forex Trend & How to Trade a Trend
A forex trend is the tendency of FX prices to move in one particular direction for a certain period of time.
Forex prices generally move in trends, the trend direction can either be upward or downwards.
Forex Traders use forex trading tools such as forex trend lines to identify forex trends.
Trendlines help to define entry and exit points for trades which are open by traders.
The trend line define the forex market trend & as long as prices continue to move within the trend line the traders will keep their trade open. Traders will only close their open forex trade once the prices stop moving within trendlines.
The two types of forex trends are:
Upward Forex Trend - Drawn using an upward forex trend line
Downward Forex Trend - Drawn using a downwards forex trend-line
Upward Forex Trend
Course: How to Draw & Trade Upwards Forex Trend
Upwards Forex Trend - Drawn using an upward forex trendline
Downward Forex Trading Trend
Course: How to Draw & Trade Downwards Forex Trend
Downwards Forex Trend - Drawn using a downwards forex trendline
The MetaTrader 4 software provides charting tools for plotting trends on forex charts. To draw trend on forex charts traders can use trend-line drawing tool that is provided in MT4 software that is shown below.
Definition and Meaning of a Forex Trend & How to Trade a Trend
To draw a trend-line on MT4 platform & choose point A where you want to start drawing and then point B where you want the it to touch. You can also right click in trend-line and on properties option choose option to extend ray by checking 'ray check box', if you do not want to extend it, then uncheck this option in your Forex platform.
trend is your friend. Is a popular saying among forex traders because you should never trade against it. This is the most reliable forex method to trade Forex because once currencies start to move in one direction they can move in that particular direction for quite some time in what is known as a trend.
Principles of How to Draw & Define Forex Trend
Use forex candle-stick charts
- The points used to draw the forex trend are along the lows of the price bars in a rising market. An upwards bullish trend move is defined by higher highs & higher lows.
- The points used to draw are along the highs of the price bars in a falling market. A downward bearish trend move is defined by lower highs & lower lows.
- The points used to plot the trend lines are extremes points - the high or the low price. These price extremes are important because a close beyond the extreme tells forex traders that the forex trend of the currency pair might be changing. This is an entry or an exit forex trading signal.
- The more often a trend is touched by price but it's not broken, the more powerful the market trend trading signal.
