Do forex market trends even exist? Market trends that can easily be picked up and be used to make a large amount of money over a short period of time? Day traders will no doubt say there is no such thing - the market is 100% unpredictable over any period longer than one day. Swing traders and long term traders will disagree.
Day traders make or lose money in a very short period of time. For them a long term trend would be a price movement that lasts from 10:00 to 12:00 in the morning. Day traders often buy and sell forex within the space of a few minutes. If you consider the fact that you have to pay commissions on trading this type of market is best left to people who know what they do. However, because day trading is quite exciting one often finds that beginners are attracted to this type of market. They very often lose a lot of money within a very short period of time.
Swing traders have a somewhat longer time frame in which they trade. For them a trend in the market is an upward or downward price movement that goes on for a few days or weeks. Although it's very easy to look at a chart and see that the price has been going up for a week, using that as a basis to assume it will be going up for another week might just be slightly flawed.
The third category of trader is the long term trader. They are not really traders at all, but should actually be called investors. They would only buy a currency if underlying economic factors (fundamental factors) indicate that the currency is on a long term upward trend. If the reverse is true, they would sell it (or go short in trading lingo). They do use technical indicators from time to time, but then over a much longer time frame than either day traders or swing traders.
Swing traders often use both technical analysis and what is called 'fundamental analysis' to make buying or selling decisions. Fundamental analysis looks at all the underlying economic factors that influence the movement of a currency. One example is inflation. When inflation of one country is higher than that of another, the currency of the first country will depreciate to adjust for this - all other things being equal!
Long term traders prefer to call themselves investors, and most of the time they only look at fundamental factors to make buying or selling decisions. Banks and other investment houses do, however, often make use of basic technical indicators like the six month moving average of a currency.
Three popular chart types used by traders are line charts, candlestick charts, and bar charts. Line charts simply connect closing prices over a period of time. Candlestick charts show opening and closing prices, as well as the high and low point for the day in a colored bar. Monochrome bar charts only show the opening and closing prices.
Forex market trends is a subject that often causes heated debate among traders. There are as many experts as there are traders. Some swear by "the trend is your friend". Others do quite well with buying a solid currency like the Euro when its price is dropping, because they know it will sooner or later rise again.
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