Forex: The trend-following strategy

The trend-following strategy is a rule-based signal system, in which favorable entry or exit times are determined. It is by far the most popular and widely used strategy. Especially for the Forex market, the trend-setting strategy is particularly well suited, as always there are intact trends.

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Technical analysis is an integral part of the financial markets. As early as the beginning of the twentieth century, investors are trying to find the right value for certain conditions, so as to find entry points. Extensive studies have been used to clarify fundamental indicators and to use them for predictions.

Basically, price trends are statistics that lead to trade signals by means of indicator analysis. The basic assumption of chart technology is that courses are developing in trends and that past course histories will be repeated in the future.

“The trend is your friend” – the basic principle for the chart like enquiry technique (translated as “the trend is your friend”). This saying is intended to make clear that one should never choose a trend. As a result, significant movements can not be strengthened in their contrast, as the same these have a peek at this web-site trend direction is generally maintained.

If there is a stronger course movement, a turning point is created, which is signaled at an early stage. Different extreme points are identified in the analysis in order to recognize changes at an early stage. A downtrend can be recognized when a trend series with many highpoints occurs. There are also sideways. This is shown when there are only slight movements on the same point over a long period of time. If a about read this article straight line is drawn into the chart, the presence of the side trend becomes even more pronounced. In summary, it can be said that chart can go in three different directions: up, down and sideways.

A trendline can be applied purely theoretically at any point in a curve to connect the points to each other. However, most significant ups and downs are usually linked together in a curve. In this case, only the ones which are formed after a course correction are considered as marked highs and lows. Then a high is linked with the other hop over to this site look high or a low with the other low.

It is also important to note that trend lines have to be adapted again and again, so that new highs and lows are created in the chart, and the trend line changes again and again.

The most suitable are weekcharts, as this generally indicates the general direction of the market. Many profit-rakers usually use weekly and fewer day passes, as they are simply more meaningful. Here the following applies: The longer the selected period, the more significant the trading signal.

How the Trend Success Strategy Works

Within the context of the resource us trend-following strategy, a long position is taken in an upward movement and a short position is taken in a downward movement, in order to follow the respective trend. Of course there are also counter-movements in every trend, but they are generally less significant than the main trend.

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  • Resistance level: This level is about the price that will fall after the investors’ acceptance. If the other total stranger price moves in the direction of resistance, the prices rise and the sellers tend to buy and the buyers less to sell.
  • Support levels: This level is about the price that will rise after the investors’ acceptance. If the price falls on a support, the price will be more favorable and the buyers tend to be image source we buying and selling less for sale.

If the price moves between the resistance and support levels, the trend will likely continue. On the other hand, the breakthrough of a resistance or support line is a sign of