Full Guide : Easy way to determine forex trend....!

One of the first things a beginner is advised is, to keep an eye on the overall trend. The direction of the trend will tell you the direction of the Forex market. It will tell you whether you must buy or sell. Overall, trend means the trend or the direction of the currency pair in which you want to trade.

Given below are three ways you can easily identify the trend of the Forex market and stay forward.

Weekly chart - 

When you are following the movement of a currency pair, you must chart it at regular intervals of say, 15-20 minutes. Prepare a weekly chart of this periodical observation. The importance of this chart lies in the fact that over a period of time, you will get to know the overall trend of the Forex market. You will also observe that trends do not change frequently. 

In fact, some trends continue in the same direction for many years. An example of this consistent trend is the comparison of Euro with dollar from the years 2002-2006. The upward trend continued in the same direction for this entire period and if you could see a weekly chart of this currency pair for this period, you will know how true this is.

Moving average

Another way to determine the direction of the Forex market is by using moving averages. This is usually charted for a period of 50 days, 100 days or 200 days. For example, plotting the movement of the trend on a chart everyday for a period of 200 days will show you the direction of the market. One key point that you will observe is that a moving average that has higher numbers will need a massive movement to show any change in the slope.

Combining a moving average with the weekly chart – This is by far, the best way to determine the direction of the trend. When you combine the two tools above and use it to your advantage, you will be able to stay forward in the market. For example, begin by plotting a 50-day moving average. 

Watch it and at the same time, keep a weekly chart where you mark your periodical observations. When the moving average is high, you know you have to buy. Now check the weekly chat and if it shows an upward trend, you know that you are on the right path.

Though, you cannot be completely correct at all times, following these tips will help you earn more profits than other traders most of the time. These are very basic ways in which you can determine the trend of the market. Remember the basic rules of the market and you will be safe.