We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
GBP/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Mixed
Bitcoin
Bullish
More View more
Real Time News
  • The #Dow Jones and #Nasdaq 100 will await key earnings from some of the world’s largest manufacturers and tech companies while the #DAX grapples with freshly-imposed tariffs. Get your equities market update from @PeterHanksFX Here: https://t.co/u2lG19JFt3 https://t.co/OHs4rQEH7T
  • Crude #oil prices are consolidating above a key support zone we’ve been tracking for more-than three months now. Get your market update from @MBForex here: https://t.co/XaACvEpLG4 #OOTT https://t.co/XjmjUt4Par
  • Why trade with Bollinger Bands®? Find out as a day trader, how you can use it to your advantage:https://t.co/dwODDDSsFi @WVenketas https://t.co/SYduJ5k9mL
  • As the global economy continues to contract, the risk of geopolitical threats undermining financial and economic stability are rising, leaving the door open to violent volatility. Get your market update from @ZabelinDimitri here:https://t.co/2HEzqPobvA https://t.co/k13SwJmbRm
  • RT @IGSquawk: We're currently pricing #GBPUSD at 1.2852 and #FTSE at 7129.2 That's a drop of 1.18% from Fridays close for GBPUSD and 0.22%…
  • #DidYouKnow a #Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out: https://t.co/c51s3IBcEu https://t.co/K6W9X4v8XD
  • The $NZD may be carving out a near-term bottom against its US counterpart but scope for gains seems limited within a broader downtrend. Get your technical analysis from @IlyaSpivak here: https://t.co/7bsVuSyWMn https://t.co/DsmNYKk8v3
  • Can you trade with the joy of missing out (#JOMO)? Find out how you can turn your #FOMOintrading to JOMO here: https://t.co/G5H26NXZQe https://t.co/pVdKUPzvmk
  • RT @PaulBrandITV: It’s likely that this will end up in court on Monday. The case in the Scottish courts may well consider that this doesn’t…
  • RT @PaulBrandITV: BREAKING: Tonight the PM has sent this letter to EU requesting an extension to Brexit. Wording is copied and pasted from…
3 Easy Steps to Trade Forex (Part 1)

3 Easy Steps to Trade Forex (Part 1)

2011-11-04 11:49:00
James Stanley, Trading Instructor, DailyFX Education,
Share:

By James Stanley, Trading Instructor, DailyFX Education

When a person first finds markets and embarks on the journey of becoming a trader, there are many lessons to learn. Success in markets is often going to be contingent on how many of those lessons are picked up, and how well the trader adheres to their trading plan developed around those principals. But before even getting to the stage of creating a trading plan, there are a few important points of emphasis that all traders should know.

In this series we are going to examine 3 of the most important elements of trading that new traders should know. We are going to discuss the subject matter, and then we will offer some additional resources that can help drive understanding even further.

The first area of trading that aspiring speculators are going to want to learn pertains to trends.

Trend simply means the directional bias that the chart has shown in the past.

For example, in the chart below, price had a defined trajectory in an upwards direction:

3_Easy_Steps_to_Trade_Forex_body_Picture_1.png, 3 Easy Steps to Trade Forex (Part 1)

Created with Marketscope/Trading Station 2.0

In a market environment such as this – traders will generally want to look at BUY positions, looking for the trend to continue to the upside.

Could short trades work here? Sure, there were a few areas where short trades may have been able to have been traded profitably. But the bias is discernibly to the upside, and that can be evidenced as price is continuing to go up. There are clearly more buyers than sellers over the duration of this chart, as price has continued to go up.

On the other hand, markets can exhibit clearly defined movements going in the other direction. The chart below identifies a strong down-trend:

3_Easy_Steps_to_Trade_Forex_body_Picture_2.png, 3 Easy Steps to Trade Forex (Part 1)

Created with Marketscope/Trading Station 2.0

Once again, this is a situation in which there is a clear imbalance in the numbers of buyers and sellers in the market. By the very fact that price was going down, we know that there was more supply than demand; or more sellers than buyers. Many traders will look to only open SELL positions in these situations.

Identifying the trend can bring many benefits to the trader. Two of the most important benefits are:

  • Have an idea for the market sentiment exhibited for that particular asset over the time period analyzed
  • To get a better understanding for which direction they may want to trade in that particular market

Many traders will ONLY take trades on the side of the longer-term trend. This is done in an effort to ‘get the trend on your side,’ or to ‘trade in the direction of the previous bias,’ in the hope that that bias or trend continues and works in the traders favor to push price higher (or lower for SELL positions).

There are many ways to identify trend, and this is something that can be customized and done in quite a few different ways so that traders can adjust their trend identification to the specific timeframe and approach they are looking to trade. In the links listed below, we cover a few of the more popular mannerisms of identifying trend.

Over the next 2 articles, we will examine 2 more of the important subject areas of trading that new traders are going to want to be familiar with.

If you’d like to learn more about identifying and trading with the trend, the following links will provide much more information:

DailyFX PLUS Online Video Course- Trend Trading

Price Action, an Introduction

How to Trade with Moving Averages

--- Written by James Stanley

To contact James Stanley, please email Instructor@DailyFX.Com. You can follow James on Twitter @JStanleyFX.

To join James Stanley’s distribution list, please click here.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.