Reuters Fx Trading Platform - The Notion of Trends in Forex Trading

Nov. 18, 2010 - PRLog -- Reuters Fx Trading Platform

No two days are the same when you trade forex. The forex markets are in constant flux, as traders react to the ever changing landscape of the foreign exchange market. The ability to identify and translate these changes into a trend is a highly sought after skill.

The sheer number of variables within the forex markets means that the concept of 'trending' is at times a contentious issue. Those who choose to delve deeper into trends often move in the direction of either fundamental analysis or technical analysis, some consider these two alternate forms of analysis as divisive whilst others believe that to become a true forex master both must be embraced.

Fundamental analysis considers the possible macroeconomic, social and political factors impacting on the market. A fundamentalist will review any factor which will have an effect on the intrinsic market value of a share. For example currency in forex trading is likely to be influenced by external factors such as interest rate decisions or economic news releases. The broad nature of these factors means that a fundamental analysis will consider the long term impact of these factors on market value. Get Internet #1 - Reuters Fx Trading Platform @ http://forexcure01.webs.com and be Successful forever!

In contrast technical analysis looks at more short term trends, pin pointing and reacting to slight movements in price. This form of analysis uses statistical and graphical data depicting previous stock behaviours such as trading volume and pricing. Technical analysts, also known as chartists will use a variety of charts to extract their data, this data ranges from bar charts through to candlestick charts.

The idea of a trend can at times move beyond theory to permeate into the everyday language of forex trading. From a psychological perspective the terms used by forex traders such as bull, bear or market top are in fact verbal assumptions of a trend. A bear market is indicative of a declining market, a bull market is indicative of a progressive market and a market top occurs when the market has reached its highest point.

Whether we choose to box trends into a specific theory or to integrate trend ideology within our everyday language, a trend should not be undervalued but nor should it be overestimated. As today's markets become increasingly saturated with choice, knowledge of trends does offer the trader a unique opportunity to contextualise and at times rationalise their trading decisions. However as with all market decisions there is always an inherent danger in placing too much trust in patterns, which is not surprisingly prone to fluctuations and erratic behaviour.

Interpretation of trends and the advantages or disadvantages of specific trend analysis is open to debate. However one fact remains constant, markets will always change. The ability to read this change and take markets from spontaneity to possibility is certainly a skill not to be underestimated. Get Internet #1 - Reuters Fx Trading Platform @ http://forexcure01.webs.com and be Successful forever!

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