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Trend and Momentum


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Trend and Momentum

 

There is a trader friend who after reading the articles and blogs about forex later commented: forex is easy ... do not have contrived meticulous ... doing too many-many theories, just get those green pips ... hehehe.

 

Let's see ... I agree that that was actually easy to not have made meticulous. It is not meant to make your heart think that forex is so meticulous and make dizzy. I agree with a friend who believes that if he could be understood with simple, why should contrived intricate? But anyway, I still recommend for prospective traders for at least understanding the basics of the analysis in forex trading, so do not make trades based on a hit and miss

 

Well, because the most basic of forex trading is to determine when to buy and when to sell, this time for discussion I will try to discuss about the trends and momentum

 

Why the trend?

 

You see, in the simplest forex trading benchmark in the deal is buy when prices rise and sell when prices fall. Of course this will be better if equipped with an understanding about things other support, such as an understanding of the support-resistant or psychological limitations, over-Bought-over sold, divergence and others. But OK is ... accordance with the motto: make it simple, while we save the first terms that make intricate. We will discuss first the simplest case, namely: the trend.

 

What is the trend?

 

One of the "wise words" in forex trading is: follow the trend, the trend is your friend. Hehehe ... Well, then we need to understand first, what is the trend?

 

Let us consider the following picture:

 

 

trend.jpg

 

Well, from the picture above, it seems we got clear view about the trend ...

 

So in general, the trend of a chart can be divided into: uptrend (trend rising), a downtrend (trend down) and Sideways (alternating trend in a certain range)

 

As a trader, we must know what the current trend trend is to take the right position.

 

There are several indicators to look at trends, among others, and Moving Average Parabolic SAR., Trned line and others.

 

Momentum

 

Completing the discussion of trends, let us discuss a bit about momentum.

 

Simply put, momentum is the "strength" of a trend.

 

Ideally, we not only know the direction of the trend, but also how much the strength of the trend. It means that we are not "late" entry into a trend. For example we know that the trend is rising, so we decided to buy ... uh, it turns out, not long before the trend turned, so the loss was that we could. More is definitely more when it turns out we are "trapped" sell at the bottom of the valley or "buy" at the top of the mountain ... aka we had sell open position when the price or buy at the lowest point when the price on the highest point, red alert ... hehehe ...

 

Well, so we're not one go in the middle of the trend, you should first identify the ongoing strength of the trend, if strong enough to continue, or is already weak, so going to immediately change direction ...

 

There are many indicators to see the strength of the trend, among others, there are RSI, MACD, ADX, W% R and others.

 

To this end I hope you've started to understand the most fundamental thing in forex trading, that is when to buy and when to sell. Of course, should keep in mind also our discussion earlier about the time frame, because after the decision to buy and sell at the same time could be different if we look at charts in different time frames. About how to read and interpreting indicators commonly used in forex trading, including the indicators that I alluded to above, we will discuss in following post.

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Hi GT3RS and everyone,

 

In the past Ive received similar questions about timing.

Id say next, while we stick to the original rules which everyone likes to stress on every time , I dont want you to be locked in a box.

As more and more traders begin to pay attention to market hours, behavior of many trading strategies and styles which are tailored to certain hours changes over the years. All WE have to do is to adjust while keeping the main trading idea alive.

 

As I said in my old posts, Ive been experimenting with shifted hours to address this early breakout question.

The idea Ive been working on goes as follows:

- we draw trend lines using 5 candle range after midnight AND now also 3 hours before the midnight if there is a valid swing to use.

- if we ended up using a swing before the midnight, we only draw a trend line which would allow us to trade a breakout in the direction of the main trend.

- our main trend is suggested by 200 EMA: price above 200 EMA - uptrend, below - downtrend.

 

So, keep the breakout idea, try shifting hours and compare results.

 

Best regards,

Edward

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Trend is everything to me. I only trade when there is a good trend. Good trend will help us in profit. I always look for a bullish trend of course before I jump in to buy and there are plenty during good business hours. Now, there are plenty during business hours and not during weekends or anything like that. I think it helps a lot cause other things do not help at all. You can see if there is a chance for a profit and then you jump in and trade. I only read trends in order to trade and I read all of them. 

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  • 5 months later...

Trend movement always has something to do with the momentum too. That is basically the reason why there are indicators specifically for dictating the trend while there are still others meant to observe the strength or the momentum of the trend. It's really a two way thing that works hand in hand with each other.

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  • 1 month later...

momentum trend created when traders agreed about the pressure. we know about bullish and bearish terms. if market bullish, mean pressure is buying. at such situation trend momentum going to north and many traders take buy position. in opposite, when market heading down or going south, mean pressure is bearish or sell. it explain that many traders open sell position.

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simple and profitable method in trading actually is ride the trend. but many traders complicate them self and not consistent in ordering position simply just because they unable to see the trend clearly or even not use trend direction as their main analysis foundation.

 

Every trader has his own way of acting in the market. Some like to complicate things when it is preferred to keep things simple. But the end of all things is matters is whether one is profitable or not. May it be complicated or a simple method.

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Yes you might be right to some extent because i have seen that many traders buying at the same time and many others selling over at the same time, both these two groups think that they are more clever than the rest.

 

It's because different people have different view about the market so supply and demand creates and prices moves. If everyone had the same view about the market then there would not be any movement in market.

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  • 4 months later...

I'm a trend trader because I found I got most results out of it and its interesting.

Same here trend trader depend on the momentum and my momentum is news, i always look at the calendar and some news site to give me overall picture of the expectations on the market and all depend on the result. Trend and momentum are actually tied to each other which make it somewhat integrated and complex at the same time.

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The idea originated from our own needs and problems. Having developed mobile apps in the past, we thought that traditional mobile monetization solutions such as banner ads were ineffective in software development firm. We also thought that there has to be a better way to do mobile monetization that would be more effective and less intrusive. So we came up with the idea of transforming offers into native in-app rewards.

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