As always in Forex, your main trading objective is to get into profitable trades most of the time and a trending market is the perfect situation to find this profitable trades by riding the trends until you make your target profit objective of the day.
While up-trend and down-trend periods will offer excellent trading results most of the time, choppy markets often create stop outs, this is they activate your stops by constantly overshooting your projected resistance level but without never really crossing too far from this level; while sideways markets produce for little in either direction making them hard to trade and to make any profit during these periods.
But what does this mean to the Forex trader? Mainly this trendy characteristic of the currency markets means that there will be plenty of opportunities for the trader to find profitable trades during the day.
As you start analyzing forex charts you will realize that the market often display’s some very familiar patterns of price movement, this is; trends; and you will notice that once a pattern is established, it becomes the most probable course of future price action until the market changes. Giving you a good forecast of what comes next with the currency prices.
But what does this mean to the Forex trader? Mainly this trendy characteristic of the currency markets means that there will be plenty of opportunities for the trader to find profitable trades during the day.
As you start analyzing forex charts you will realize that the market often display’s some very familiar patterns of price movement, this is; trends; and you will notice that once a pattern is established, it becomes the most probable course of future price action until the market changes. Giving you a good forecast of what comes next with the currency prices.
There are two types of markets which will become very important for you to identify and understand; these are: trending and, the less frequent, trend-less markets. Each market type has two specific patterns which you will also notice over time.
The Forex market is widely known by its high liquidity and high volume of transactions occurring during most of its long trading week. These characteristics highly contribute to make the Forex market a very trendy market with few trend-less periods during the whole trading period.