How to Recognize Trend Changes

It is very important to understand how to recognize trend changes so that traders can know how well the forex market conditions are. In trading, being late in recognizing trend changes can be fatal to a trader's capital. Trend is a representation of market power and it is not easy to trade forex against the market, it is even impossible to do because it can cause hostility to market trends.

Traders must identify the ongoing trend to get maximum results. Difficulties will be faced by traders if there is no good understanding of the trend. Unfortunately, this trend is dynamic and fluctuating so it will continue to change from time to time, from uptrend, downtrend to sideways. Not only knowing the current market trends, it is also important to recognize the potential for changes in market direction so that later you don't take the wrong steps. Sudden changes in direction can happen so traders must remain vigilant, here's how to identify trend changes that can help traders:

Knowing the Time Frame Used

Taking advantage of different forex time frames can help traders to see the bigger trends and more detailed price action that may be taking place. Different points of view can be formed when switching between different time frames on the same currency pair and can either benefit or hinder the analysis. Time frames in forex trading are generally classified as long term, medium term and short term. Traders have the option to combine all three, or to just use one longer time frame and one shorter time frame when analyzing potential trades. While longer time frames are useful for identifying trade settings, shorter time frames are useful for entering positions.

Knowing the Trend (Visual, Trend Line, Trend Channel)

Trendline is a very important tool and is commonly used for technical analysis in forex trading (forex trading). Besides functioning as support (in an uptrend) and resistance (in a downtrend), the trendline is one of the simplest tools to identify the direction of the trend. One of the characteristics of the change in trend is the break of the trendline which can be an early indication that the price may change direction. The trendline is considered translucent if the entire candlestick body that is formed is outside the trendline line.

Recognizing Important Levels (SNR, Retracement, Psychology Level)

SNR (Support and Resistance) plays an important role in trading. Where these levels will signal traders where the price will stop and make a turning point. Many traders already use these levels for transactions. This is because these levels are barriers that reflect market behavior. In finding balance or trend levels, there are lots of support and resistance level tools that traders can use, namely horizontal lines and trendlines.

Trigger or Signal (Rejection/Rijection/Tail, Significant Level Color Change, Candle Pattern/Confirmation, Breakout). Triggers are events that meet the criteria for initiating a transaction, usually market conditions, such as fluctuations in the price of an index or security. Triggers help traders automate the entry and exit strategies of traders too early, too late, or trading the wrong way. Traders need real time triggers to let traders know that now is the time to act. Before trading, traders can have one or more decision zones, after that be patient and wait for the price to reach those zones. Once the price reaches the zone, traders can look for triggers and confirming patterns, i.e. when price action confirms a breakout and bounce. Confirmation patterns are candlestick patterns that suggest traders place positions following the direction of movement according to the pattern that appears or confirming a certain price direction in the decision zone.

Limiting Losses (Capital)

Many of the traders are looking for ways how not to easily lose or minimize risk in forex trading. This is indeed a very interesting topic because traders definitely want to reduce the potential loss as small as possible, but also want to get the maximum profit in every transaction. In order to minimize risk and not easily lose, traders should explore the topic of risk management (risk management).

Rational Profit Target

Many beginner forex traders have difficulty determining profit targets, so the profits obtained are not optimal. Not infrequently novice traders use hunches to determine when to close a position. In fact, it poses a risk of being late in taking profits. When you wake up, the trading position may have turned a loss. In the world of trading, the opportunity to achieve the maximum profit is wide open. Even in a day traders can earn up to 100% more than the initial capital. Of course this attracts traders in achieving large profits. However, traders also need to set targets in seeking profit and apply consistent trading strategies so that profit targets can actually be achieved.

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