If you are a trader in Olymp Trade then you will attest to this truth; catching a trend is the best thing that has happened to the world since sliced bread.
With a steady trend in the charts, you can enter a buy or sell position and double or triple your account balance within minutes.
But don’t be fooled (if you are a beginner).
As much as identifying a trend may be easy in theory, it’s one of those daunting tasks in practice (for beginners).
Luckily, in this article, I will show you how to easily identify a trend on Olymp Trade charts so you can profit from it.
But first, let’s define a trend and know how much impact it can bring when identified earlier.
What is the trend?
A trend is when the asset’s prices are either going up or down. This gives us two types of trends: an uptrend and a downtrend.
You can say an asset is in an uptrend when it records price points of higher highs and higher lows. On the flip side, an asset is in a downtrend when its price forms lower highs and lower lows.
But make no mistake.
A trend on Olymp Trade won’t always behave this way. There are some occasions when an asset experiences consolidation.
Such periods are in fact common more than you think and you’d find the prices registering completely the opposite of what we just talked about.
I.e. you’d find lower highs and lower lows during an uptrend and higher highs and higher lows during a downtrend.
What a mess, or is it?
Additionally, almost 80% of the time, the price action happens between the support and resistance levels. These are invisible psychological barriers where the price cannot break as it moves.
Also, the easiest way on how to instantly identify a trend on Olymp Trade is by zooming out of your chart.
Let me explain.
Depending on the type of chart time frame you are looking at, you could be seeing only half the picture as far as identifying a trend on Olymp Trade is concerned.
As such, if you compare a 5-minute chart with a 10-minute chart showing the same asset, you will see different angles of the same trend.
Because when using a slightly tighter time frame, you are looking closer to the price action. On the other hand, identifying trends gets easier when using a slightly higher timeframe.
Think of it as holding something close to your eyes. Things look blurry when they are held closer, but you get a clear view when you move it a little bit further.
Forward, I’ll show you two techniques you can use to identify a trend on Olymp Trade.
How to Recognize a Trend in Olymp Trade – Method #1: Identifying the breakout points.
You see, when a trend on Olymp Trade is baking, you will see some form of disturbance in the market. Such disturbances are caused by a change in trading volume, news, or just a general uncertainty which in turn affects the prices.
Ideally, when the market is stable, the price action is happening in between the support and resistance levels, which are considered safe levels. But if you are looking at the moving average, you may see some fluctuations.
When the time to serve the trend comes, the price movement will be more intense. As a result, the price will break and close below or above the resistance or support lines.
Here, you can say that the price breakouts of the ‘safe zone.’
Such unprecedented up and down movement of the price is actually paving way for the formation of a trend.
As such, to identify a trend on Olymp Trade with this method, all you have to do is look for breakout points. This is the point where the price breaks above or below the support and resistance levels.
Method #2: Watch out for the fakeout points.
Once in a while, you will meet fake breakout signals. Such is what is known as fakeout.
Fakeouts on Olymp Trade happens when the price tests support and resistance levels, resulting in breakouts and gains.
Gains happen when the price suddenly drops beyond the safe lines.
This breaks the lines, yes, but only for a short period because it reverses almost immediately.
As a result, this short term breaking of the safe lines cannot be used to identify a trend on Olymp Trade.
With that in mind, how then, can you differentiate a fakeout and a breakout?
Difference between a fakeout and breakout on Olymp Trade.
To understand the difference between the two, you need to apply the knowledge of candle shapes.
Since a breakout is indicating a strong trend, you’d expect its candle to have a long body.
As such, when you see a short candlestick during a breakout, expect it to reverse to the safe zone. And that could be a fakeout signal just out to test the resistance and support level.
One more thing:
Be careful when trading in volatile markets.
Because they are riddled with fakeout signals. Staple markets are the opposite. They contain fewer fakeouts.
How to Recognize a Trend in Olymp Trade – Method #3: Watch out for price correction.
Price correction happens when during a strong trend, a segment of the price goes against the general trend, but briefly before reversing and joining the main trend direction.
During the correction, you should expect a new and strong trend.
And to be safe with this technique, you should wait for the correction to end, and then open a position.
By doing so, you are sure that the trend has resumed its current direction, eliminating reversal tendencies.
Learning how to recognize a trend on Olymp Trade is not rocket science. In fact, by using a trend line (connecting at least two peaks during a downtrend and at least two troughs during an uptrend) makes it easier.
Once you do that, identify the support and resistance levels and pay attention to how the price interacts with it.
When the lines are broken, expect the price to continue in that direction. And open trade positions accordingly.