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Identifying the Market Trend & Forex Trend Systems

The accurate recognition of a strong Forex market trend can lead to the accumulation of great trading profits. Forex currencies tend to trend well in long directional moves. During these price movements, traders can gain a serious advantage over the market and increase considerably the likelihood of profitable trades.

Forex Trend Duration

In general, a Forex market trend can last for hours, days, weeks, months, or even a few years.

-Short-term trends usually occur due to simple inefficiencies between demand and supply

-Long-term Forex trends occur and evolve according to new fundamental data, and reverse due to key fundamental changes

Multiple Trends in the Same Market

The same market can be the subject of different trends. The best approach to deal with different trends in different timeframes is the Descending Approach. That means commencing the trend identification on the higher chart by moving to lower charts. You can start on a Daily Chart and then move to H4 and H1 charts. Even shorter timeframes can be useful, in optimizing your position’s entry/exit.

Distinguishing Market Trends

There are two main trend types: the (i) primary, and the (ii) secondary trends:

(i) Primary Trend

The Primary Trend is the major trend of the market. It can last for weeks, months or years and includes several short-term secondary trends. According to the Dow Theory, the primary trend has a strong impact on the secondary and minor trends within the same market.

(ii) Secondary Trend

A secondary trend is less significant that a primary trend and can last for hours, days, or weeks. The secondary trends move usually in the opposite direction of the primary trend. That includes short-term corrections, take-profit periods, or bear market rallies.

Secondary trends can also occur in flat markets. This means moving towards the boundaries of a specific range. When the price reaches the upper or the lower boundary, the market retraces on the opposite direction and a new secondary trend commences (Ranging Markets).

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Creating your Own Intraday Forex Trading Strategy

The Foreign Exchange market is characterized by high volatility and uncertainty. Therefore, only the existence of an effective trade strategy can lead to long-term success. There are tens of different trading strategies which are usually based on the combination of technical analysis and money management techniques. It is important to find a trading strategy that is 100% compatible with your risk profile and your general personality in order to implement it with discipline.

 

Trading Intraday -Basic Requirements

Trading intraday is difficult and not suitable for all Forex Traders. In order to evolve as a successful intraday trader, first of all, you need to have discipline. Only discipline and logic can drive you with safety when you are trading in tiny timeframes. Emotional trading, on the other hand, is the wrong way to go.

Moreover, trading intraday requires the right Forex Broker, as only ECN/STP brokers are suitable for intraday traders. Here are some important features that you should seek when choosing a Forex Broker for intraday trading:

(i) Minimum spreads on the pairs that matter to you

(ii) Offering a rebate plan that can limit trading cost furthermore (find Forex Rebates)

(iii) Fast execution without delays and price manipulation (ECN/STP order execution)

(iv) Offering the right trade platform (i.e. MetaTrader4 or JForex)

(v) Full scalping allowance

(vi) Full safety of trading funds (regulation, client funds segregation, etc.)

Only ECN/STP Forex brokers can offer all the above characteristics. On the contrary, Dealing-Desk brokers (market makers) simply can’t. This is because Dealing-Desk Brokers are traditionally charging high spreads and usually their trading orders suffer from high price manipulation and delays.

» Compare ECN/STP Online Brokers

 

Creating Trade Strategies using the Expert Advisor Builder for MT4, MT5, and Tradestation 

EA Builder is a web app that can transform any trading idea into an MT4/MT5 indicator. The app can also send trading alerts (via email and SMS) making the implementation of a manual trading strategy an easy task.

□ Operation: Creating custom indicators (No Skills)

□ Platforms: MT4/MT5 and TradeStation

□ Price: Free for developing manual trading systems / paid for developing EAs

It is important to mention that you don't need to have any special skills in order to develop manual strategies for trading Forex, Equities, ETFs, Bonds, and Commodities.

(1) No Programming Skills (The app can be easily used by beginners)

(2) Includes advanced Money Management functions (Spread & Slippage Control)

(3) Offers different alerting methods (eMail, Audio, and On-Screen)

(4) Unlimited number of accounts

» EABuilder App Website 

 

Building your Own Intraday Trading Strategy

The first thing you need to build your trading strategy is to find a lot of trading ideas. These ideas may concern recent price behavior, pattern recognition, statistics etc.

Reverse Engineering a Price Chart

Reverse engineering a price chart means adding two indicators in a price chart and examine their behavior over time. This is a simple way of building your own Forex Trading Strategy. You can use two Simple Moving Averages (one is slow and the other is fast). Examine the real price action at the points where these two moving averages interact (crossover). You can use for example:

■ 13-periods Moving Average (1-Hour chart)

■ 34-periods Moving Average (4-Hours chart)

Read more about the Moving Averages

Additionally, you may use another indicator to filter the results, for example, MACD or the Relative Strength Index (RSI).