How to Identify Trends Using Forex Trading System Software

Noun. The downward trend of the economy. Digital technologies are often the new trend to consider. There’s an alarming trend toward childhood obesity in schools.


Verb. During the cold winter months, where school systems often trend toward canceling classes at the first sign of snow or a snowflake, there is also a disturbing trend toward truancy. A truancy officer is commonly selected to keep a track of truant students. If the trend continues toward truancy and into spring, with fewer classes available to keep classes balanced, the instructor may implement a “fractals indicator” which is shown on the chalkboard near the front door and reminds teachers to check for the “fractals.”

Verb. The direction of the market is being predicted. It’s a good idea to listen carefully to the market sentiment as it evolves toward a particular uptrend. It can be an exhilarating feeling to identify trends and watch them develop, but it can also be frightening if one is blindsided by the emergence of a trend which turns against a market already experiencing a downward trend.

Verbs. Trend indicators like the fractals indicator mentioned earlier are very useful indicators to help traders identify trends. But just relying on these indicators can’t assure that the market will reverse. To help traders prevent market reversals, the trader must have a plan for entering and exiting the market when a trend reverses. This plan can be formulated using the following considerations: Which indicators are showing the trend? Which of the indicators is showing the highest level of support or resistance?

Traders should think carefully about their risk tolerance and their overall strategy. The trader may not want to take large risks that may result in a quick loss. Most seasoned traders would advise traders to trade in only one trend for a long period of time. Since longer trend lines tend to have stronger slope angles, traders should avoid trading near the moving averages.

There are more factors that can help identify trends. A good trader should learn to use technical and fundamental indicators together. Traders should be able to combine the above three techniques into a coherent trading plan that they can execute at any point of time. However, a good trader should not expect his or her every action to be market tested.

A good indicator to identify a trend is the oscillator or the moving averages function. The oscillator can help the trader to understand the changing trends by drawing a trend line or other trend analysis. Some oscillators are based on moving averages. These are considered the most reliable indicators of future trends. Other types of moving averages include the Stochastic, Relative Strength Index (RSI) and Simple Moving Average Convergence Divergence (SMCAD).

Some trend trading strategies also consider the use of candlestick charting. Traders may choose to plot moving averages or other trendline in combination with candlesticks. Trendline can be used with a candlestick by plotting the high-low or breakouts in the trend. Trendlines are particularly useful for trend trading since trendlines are derived from market measurements and prices.