How to use Forex trends to your trading advantage

Forex is short for Foreign Exchange, and it is fairly new but an up and coming area of market trading. It is unique and unlike any other with many distinctive features, which we will present in the following passages. Through this significant area of trading, you can watch certain trends form as time passes, and try to use them to your advantage suitable to your biggest trading goals and needs.


What is the latest Forex news? Since markets are constantly changing and evolving, the trading landscape is improving fast while embracing new types and tricks of trading. Over time, trends can form – creating new and creative ways of engaging with stocks, indices, and currencies. What is a trend, anyway? Is it the same as in fashion trends? Well, it’s quite similar, though it has some differences.

What is a Trend?


A trend represents some sort of tendency of a certain force to get organized in a way that it will be easily recognizable by a vast variety of people. Who can forget the great fashion trend of suspenders? Everyone used to wear them! Thankfully, that’s over with. Because though trends can form over time and create a powerful impact, sometimes they expire. So, they need to be replaced with something new and better.


The same goes for Forex trends. As the market evolves, the trends go along with it. By keeping up, they implement new and unique ways of market trading, creating a new generation of successful traders. And with each trader that joins this ride, something new and special is added to the mix, improving these trends in a way that they satisfy all the requirements of the hectic trading landscape we see today.

How to Notice a Trend?

One other important thing about trends is that they can move in every direction – up or down, left or right and all the way back to the beginning again. You never know, because although trends are reliable in a way because they are long-standing, they can also change swiftly as they came to be like they never existed. This is the reason why there are special scientific branches and methods that deal with trends – as they are an endless source of new knowledge.


Trends can be long term or short term, it depends on many factors. From the current global political situation to the economic obstacles in the other parts of the world, it all adds a special touch to the mix of Forex trading, which can possibly “make or break” the market during a particular trading session. Detecting certain trends can also affect the success of each individual trader. Though they are not as reliable, they can still serve as a helpful guide in times of uncertainty, which is most, if not all the time spent on the market.

Currency Trends

When it comes to currencies, you can pretty much make out on your own what will happen, depending on the economy of the state in which the currency is used. There can be no huge surprises if you are familiar with the inner political construction which can possibly affect a certain currency at some point. Speaking of economy, its main goal is to drive investors. More investors – a more successful economy, hence, a much stronger currency than before.


Especially after the old gold-based system broke down after World War I, the demand for gold as an alternative to fiat currencies is creating a higher demand for currencies. This is mostly the case in the countries which are rich in gold, such as Australia, Canada or South Africa.

A Trend or a Range?

So, when something significant happens, how can we determine if it’s a trend or just a range? Ranges are much less impactful and shorter-lasting, while trends can withstand longer periods of time, including months or even years. To decide on the difference between the two, the most useful tool out there is technical analysis.


This type of study is a trading discipline that evaluates different types of investments while trying to identify trading opportunities. The main instrument this analysis applies are trends – the common direction of a certain event on the market. These trends can be quite different. From price movements to volume, this analysis considers everything. If useful, it will most likely affect your trading journey in the long run.

When you engage in closer research of the Forex news, you can easily notice how these trends are a visible reason for practically each trading event in the world. For example, oil prices have a tendency of decreasing as the stockpiles rise, since there will probably be no reason for a shortage soon. Similarly, if something happens to disrupt this situation – such as a war or a health crisis that affects oil production – the turmoil will affect the oil prices in a huge way, creating a downward trend until certain conflict ease.

Technical Analysis

An important fact to note is that the technical analysis uses anticipation, not a prediction. Expecting a scientific method to predict anything is pointless since science is based on facts. That’s why technical analysis is looking at and researching the previous and current events, hoping to anticipate how will they develop in the future.


Why is anticipation important? Whether you admit it or not, your emotions gravely affect your trading experience. It doesn’t matter who you are or where you come from. So, what happens when you are led by emotions? It is only natural that you would anticipate and try to predict the outcome on your own. But with technical analysis, you will have a clearer image, backed up by facts and scientific research. This way you can focus on creating a unique trading strategy for yourself, instead of dwelling on details of past experiences. Technical analysis does that for you.


When a certain trend takes place, it can also go in reverse after some significant movement or event. This is known as a reversal, and it is quite common among Forex news. It can happen in the blink of an eye. But if you take a closer look, you will be able to notice what contributed to this sudden change. And it is impossible to predict what will happen in the near or distant future. But as we mentioned before, you can still track some factors and try to apply them in a way it serves your trading goal.

But what if you can’t detect which factor is useful, and which is just passing by? This is where the simplicity of trading comes to shine. By filtering out the unnecessary noise, you can look at the clearer picture and get better results of the situation. For example, you analyze only the price of a certain asset. Then you will notice many new different parts and details about it and connect them to your own experience and knowledge. In all honesty, a certain pattern becomes significant only if it was historically occurring in 80% to 90% of the same situations. This is quite unusual. One of the important features that can affect this is the season itself. Spring or winter, which season do you prefer? With trading, seasons affect your experience in many ways, and might not in the way you thought of at first.

Seasonal Trends

Namely, if you are, for example, looking to trade long-term, you could wait for a certain currency to take a seasonal trend, and assume exactly what will happen during that period in time. On the other hand, if you are a short-term trader, there are benefits. Mainly, you can significantly decrease your holding period if you open a trade that is against this trend. In both cases, seasonal trends are useful as two sides of the same coin.

Types of Trends

All of this created three basic principles of technical analysis. They are considered as a guide-list in today’s research, as well. They are:

  1. The market considers prices the most – namely, technical analysis focuses solely on prices and their patterns. This is mainly because it considers that the price itself already consists of all other factors. From the company’s internal effects on the price of a certain asset to trading psychology, all of this is already a part of the listed price of the asset. This makes it easier to consider other factors, which are many in the broad landscape of the market trading
  2. All prices will move in trends – sooner or later, the price of each asset on the market will take its natural course. By forming a habit with other factors, it creates a trend which you can easily follow and rely your research on
  3. History, after all, always repeats itself – more or less, we were all witnesses to this. What once happened, could easily come into form once again, often without any explanation, even. This is the magic of life, as well as market trading. Past experiences tend to repeat themselves through the trading sessions as time passes.

In the end, technical analysis uses forecasts to try and anticipate (not predict!) certain trends in trading. This way, you can have more enjoyable trading experience. As you can see, there are a lot of things happening behind the scenes. Also, a lot of effort is put into every single one of them.


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