How do I recognise the trend in trading?

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Recognising the trend and entering or exiting forex trading at the right time requires not only luck but also analysis and strategy. The most important rule of forex trading is, of course, that of calculable risk. You should be aware of how much money you could win in Exness download, but more importantly, how much money you could lose. When you are aware of this, you are ready to analyse the forex market and apply strategies to reduce your risk. If you are able to spot a trend, this will help increase your chances of winning in forex trading and reduce your risk.

Trend analysis

Trend analysis involves looking at past trends in the exchange rate. Often you can infer the future development of the exchange rate from the past. You should also take a look at the current news. Often important conclusions for the development of an exchange rate can be drawn from fiscal policy decisions.

Once you have identified the trend, you can open or close a position. Buying a currency pair is profitable when the price rises (-> upward trend) or falls (downward trend), because in Forex trading you can profit from both rising and falling prices. There are many brokers, which you can read about in our reviews, that offer over 100 currency pairs. One of them is WH Selfinvest, for example, but it is more suitable for professionals. Since the minimum deposit is 2500 euros, which of course proves a very high seriousness of the broker, this fact already requires a high equity capital. If the price falls (-> downward trend), the sale of a currency pair is profitable. Trend analysis requires that you decide on a time window (short, medium or long term) that you are looking at.

In addition to analysing the trend, you can also base your forecast on the analysis of the trading range. However, this is more complicated and requires the willingness to enter or exit at any time.

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Downtrend: constantly falling lows constantly falling highs

After you have identified the trend and opened a position, you should follow it and keep an eye on the trend. If you think the trend is disappearing or turning, you should act and close the losing positions and possibly reopen them in the new direction.

Expert Tip:

Beginners in particular should start with the classic trend following method. If trends are recognised and the trend is followed for a long time, then trading is much more relaxed and the profits are significantly higher than the partial profits with other methods. When a trend following system is understood and profitably implemented, then traders can start trying other methods. But no matter which trading approach is followed: a well thought-out risk and money management with strict rules is essential and the only protection for preserving the capital!

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