How to define a trend

The First Step

to succesful trading

The first step is decision making, a trader needs to plan which sort of market condition they are searching to take advantage of. The market displays three general conditions:

1. Trend (Uptrend or Downtrend)
2. Range
3. Breakout

The above mentioned market conditions exhibit noticeable different hues, for instance, ranges. Ranges normally occur during quiet markets but as soon as the price breaks out usually in the shape of stimuli or in the form of news thesupport and/or resistance that denote the ranges are broken.

Breakouts are rapid and unrestrained, jumping swiftly to a traders stop or limit. They are fraught (very volatile) and because of this in terms of money and risk management strategies must be build otherwise as compared to range or trend techniques.

The next step after speculating which market condition a trader is building a strategy for is forming a decision on timeframes. The decision will help them in surveying and accomplishing their trade in a specific holding time.

A trader can use two kinds of charts in the case of time-frames:

1. Long-term charts: to compute the general trends that may occur in a currency pair (or another security).
2. Short-term chart: to get a more detailed view as they enter the trade