What is a Trend in Forex?
A Trend in Forex Trading is the tendency of prices to move towards a particular direction over a period of time.
A Trend can be Upwards, Downwards, or even sideways. It can also be either long term or short term!
For successful Forex Trading, it is required of you to identify trends and position yourself along with them for profitable trading!
Why Identify Trends?
You cannot afford to Trade Forex based on luck!! If that be the case, then you might consider yourself a gambler!!
This is not the way I would like you to trade Forex.
You need proven and sure strategies to trade profitably.
Identification of these trends and positioning of oneself along them is a sure way of profitable trading in Expert Option!!
Trend types in Expert Option.
There are three main types of trends which occur on any trading platform;
- Upwards Trend.
- Downwards Trend.
- Sideways Trend.
Upwards Trend – This trend occurs when the price keeps going up, creating bottoms that are higher than the previous ones.
Downwards Trend – This trend occurs when the price continues to fall, creating tops that are lower than the previous ones.
Sideways Trend – This trend occurs if the price does not fall or rise continuously but creates equal tops and bottoms.
Trends in Expert option are best identified by drawing Ray trend lines Using the Ray drawing tool in expert Option.
This tool is best used on the Area chart type but works just as fine with other charts.
How to Set up a New Chart type on Expert Option.
Set up the Area Chart type in the following steps;
- Log into your Expert Option platform.
- Locate the Chart type Tab close to the Indicators Tab.
- Hit the Chart type Tab.
- Choose AREA/Candlesticks from the available options.
- Hit the apply button.
There you go!!
How to Set Up the Ray Drawing tool on Expert Option.
Set Up the Ray Drawing tool in the following steps;
- Log in to your Expert Option platform.
- Locate the Drawings Tab( Pencil-like).
- Hit the Drawings Tab.
- Choose RAY from the options.
- Adjust line thickness and color.
- Hit the Apply.
There you go!!
Drawing trend lines Using the Ray Drawing Tool.
The Ray drawing tool is used to draw lines on the price chart to trace price movements along with the trend.
It is used with respect to the trend types that we have learned above.
Upwards Trend – Using the Ray, draw a line connecting the successive bottoms. This produces a Ray trend line going up! If such a line is extended, it will still be moving up meaning that the trend is surely Upwards.
Downwards Trend – Using the Ray, draw a line connecting the successive tops. This produces a Ray trend line moving down! Extending such a line gives the indication that the trend is certainly Downwards.
Sideways Trend – Using the Ray, draw two lines. One line connecting the successive tops and another connecting the successive bottoms.
This produces Ray trend lines moving sideways! Extending these two lines does not give you a definite upward or downwards direction. This means that the direction of the trend is not fit for taking either buy or sell positions. It is an unclear zone!!
Using Ray trend lines to Place Trades in Expert Option.
Let us note the following first;
- In an uptrend, the price will keep going up until the price breaks off the Upward Ray trend line going downward. This will mean that the trend has shifted from an Uptrend and is now becoming a Downtrend!
- Similarly, in a Downtrend, the price will keep going down until the price breaks out of the Downward Ray trend line going up. This will mean that the trend is changing from being a Downtrend to being an Uptrend!
Understood? Use this knowledge to open winning trades on the Expert Option platform.
- If the trend is Upwards according to the Ray trend line you have drawn, then that is a BUY SIGNAL!!
- Similarly, if the trend is Downwards, then it goes without saying that it is a SELL SIGNAL!!
- However, if the trend is Sideways, there is no clear upward or downward trend where you can confidently consider Buying or Selling! This means that the market is preparing for a new trend. Wait!
Both traders who take short and those who take long positions can use the Ray trend lines to trade Profitably on Expert Option.
If you are a scalpers trading within 1 minute to 5 minutes,
Consider buying when the Ray trend line indicates an Uptrend. Chances of the price going Up are more than of the price going Down! The same applies to Sell positions when the trend is Downward.
Points to Remember!
- Trends in Expert Option are best identified by drawing trend lines Using the Ray drawing tool!!
- This tool is best used on the Area chart type but works just well on other chart types too
The information provided does not constitute a recommendation to carry out transactions. When using this information, you are solely responsible for your decisions and assume all risks associated with the financial result of such transactions.