Forex Trends - Forex Trading Stages You Need to Know

Aug. 26, 2011 - PRLog -- Fl,USA....................... A Forex trend, or foreign exchange, is merely a tendency for market prices to more a certain direction for a period of time. These trends can be long term, short term, upward, downward, even sideways. When you invest in the Forex market, your ability to identify trends will dictate your success.

Forex trends themselves more in a Elliot wave, which is five steps. Another waves follows this with three parts, the ABC correction. This is called an Elliot Wave, and is the first stage in a trend. Most will refer to the pivots, looking for seven to eleven advancing pivots. Make sure to note the count as the price climbs.

For the uninitiated, an Elliot wave is a market theory that the market itself moves in waves. If one is able to identify a wave, they stand to make great gains. Waves are able to be caused by factors not immediately obvious. For example:

An ice cream maker is on an upward trend; At the same time, milk will also be on an upward trend. Once milk starts to drop, odds are the ice cream is not selling as well as it was.

In forgone markets, we mainly see this with currency. Countries who produce gold, like Canada, are in need of more currency. As they export, the value of the currency dollar climbs, until it harms the export market. Goods become more expensive, and it becomes cheaper to find exports from other countries with a weaker dollar (And lower prices.) With this, we can see the beginning of a trend, the need for gold driving up the need for currency, and it's crest, when export costs become too high.

Predicting waves or trends is the same as predicting the future; Few can do it, and fewer will. This is the next stage, being able to calculate potential success by comparing various factors, and stacking them to tilt odds in your direction. This is all speculation, of course, and nothing is for certain, to it's important to remember the risk involved.

The next step is to always place stops for if the trade goes afoul. Make sure your stops are in a safe place to prevent them being removed prematurely. Only the market knows where these are and, in some circumstances, will head for them.

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