Trend. (verb) The ongoing path (process) of something, including the trend of price, interest, currency, etc. The path of something. The strength of an economic commodity, as judged by its economic value. A trend can also be a general indication that something is likely to happen, and that nothing can reverse it.
Traders prefer trading in directions of Uptrend. Uptrends are called “in the up” direction because traders expect the prices of goods and services to rise over a defined period of time. It is a strong trend. There are times when traders may buy in the “buyer’s high” or “sellers low” directions. In both cases, the trader expects that the prices of commodities will rise over a defined period of time but will sell before the trend reaches a high.
There are many ways to identify trends. Traders use multiple types of indicators to identify trends. Some use candlestick charts, some use line charts, and some use price action analysis. The best of these techniques will depend on what type of trader you are.
The best of all techniques for identifying trends, however, are known as technical analysis. Technical analysis makes use of price action alone to determine if the trend is valid. So, instead of relying on indicators like Fibonacci ratios or moving averages, which can be completely unreliable, technical analysts examine a variety of indicators to determine if the trend is real.
The most reliable indicator for trend identification is the Fractal Indicator, or FICO score. The FICO score is a mathematical formula that determines the points at which prices in trending markets tend to converge. This formula was developed by Bill Gross and is used by financial institutions to determine credit risk. The formula divides the price into its fundamental and technical parts. By analyzing the elements of price that are related to the FICO score, it is possible to tell whether the trend is valid.
The most widely-used technique for trend spotting in forex trading trending markets is called the stop-loss. The stop-loss is the maximum loss that a trader is willing to accept for a particular market price. By placing a stop-loss at a point where the market price has already reached the lowest possible point, you will prevent yourself from incurring any losses. The key is to place your stops close enough to each other so that you will not get hit with a large profit target if the price moves against you. Another widely-used strategy is to keep a limit on your trades. Setting a limit to how much you are willing to lose, will prevent you from incurring large losses if the market moves against you.
