Trend

Trend is one of the best seasons in financial markets. It is time when most traders make money. It is due to the fact that when trends start they usually go in one direction till they exhaust themselves. Big trends do not happen very fast, usually one or two times a year. That’s when most of the money is made by large investment funds. However, smaller trends do happen on a monthly, weekly and daily basis as well and you can capitalize on those using various technical, fundamental and other kinds of tools. 

Trends usually start when there are adequate fundamental conditions for that. After staying for a long time in ranges prices finally move out of their ranges and start trending. I like these periods in the markets because I can build up a line of positions and go with the flow. However, the same principles can be applied not only in mega trends but also in micro trends. Some fundamental news can cause a huge move and you can profit on that. Let us look at what happened today in Forex market.

Trend for Monday, March 14, 2011

As you may know the tragedy hit Japan recently. It was one of those fundamental factors that influence markets a lot. Japanese government threw billions into markets to slow the collapse in stocks. You could have traded this news by buying a break of 123 pattern in usd/jpy that formed on 15 minute chart right after market opened. In fact, you could have traded any Japanese yen pair by selling yen. You would have closed your position after a failure to reach a higher high and a breach of lower low. Look at the example and you will understand it better. So much for today. See you tomorrow.