FX Trend Indicators You Must Know

Trend Trading

Trend trading may be a trading type that makes tries to capture gains through the analysis of an asset's momentum during a specific direction. Once the price is moving in one overall direction, like up or down, that's known as a trend. Trend traders enter into a long-term position once security is trending upward.

What is trend trading?

  • Trend trading could be a strategy that involves using technical indicators to spot the direction of market momentum. The thought supports that markets have a component of predictability, therefore by analyzing historical trends and price movements, a trader is going to be ready to forecast what may happen in the future.
  • Once the price is moving in one specific direction, like an upward or downward direction, then it's referred to as a trend.
  • A trader will forecast and analyze the trading supported by varied parts like past performance, price movements, historical trends, and more.
  • Trend traders sometimes attempt to accumulate gains by analyzing the asset’s momentum in a specific direction.
  • Trend trading is typically thought of middle to long-run trading strategy, however, it runs in theory and covers any timeframe, looking at however long the trend lasts. it's sometimes adopted by traders preferring a position trading or swing trading type.
  • Position traders are people who can hold a trade for all the prevailing trends, ignoring day-after-day fluctuations, whereas swing traders are people who can determine a trend and ride it from beginning to end.


How do determine a trend?

  • Trend trading methods are designed to assist you to determine trends as early as possible with better entry and potential exit in the forex market before they reverse.
  • Both the opening price and closing price, and the trading vary of each candle give traders a wealth of data that will be wont to determine the ebb and flow of the trend.
  • Broadly speaking, there are 3 varieties of the primary trend: uptrends, downtrends, and sideways trends.


  • When a price|worth is increasing in value, it's referred to as an uptrend. A trader seeking to require advantage of those movements would enter a long position once the market is reaching progressively high price levels.
  • For instance, suppose a company’s share price will increase by 100p, then declines by 50p, then rises by 110p, and falls by 40p, it'd be the same to be in an uptrend because it is creating higher highs and better lows.


  • When a price|value} is decreasing in value, it's the same to be during a downtrend. A trend trader can enter a short position once the asset is falling to lower cost points.
  •  For instance, if a stock decreases in worth by 200p, then will increase by 100p, falls once more by 300p, and rises by 50p, it'd be during a downtrend. This is often a result of its falling to lower lows and lower highs.

Sideways Trend

  • When a market wort is neither reaching higher price points nor lower ones, it's the same to be during a sideways trend.
  • Most trend traders won't observe those trends, however, various traders or scalpers – who obtain to require advantage of extraordinarily short-run market movements – can look out for these finite movements.


Types of Forex Indicators

Now we’ve understood the meaning of trend trading and their sorts. Let’s scrutinize the methods that several traders use to spot trends. And also grab the data on types of  Forex indicators and how it becomes best in forex market commercialism

What are the best forex indicators in forex market trading?

In the forex market there are numerous indicators used for forex trading like Bollinger Bands, Moving Average, Stochastic oscillator, etc Out of them the best are as follows utilized in trend forex trending that helps the trader to urge most profits for their investments.

The MACD Trading Indicator

  • The Moving Average Convergence Divergence (MACD) indicator finds out the average price of a security over a selected timeframe to assist traders to determine trends.
  • This is the foremost effective trend trading strategy as a result of many traders entering a long position at a particular timeframe wherever a short-run moving average surpasses the longer-term moving average.
  • However, traders can even enter a short-run position if the short-run moving average crosses below the longer-term moving average.
  • Traders usually merge moving average trends with many alternative varieties of technical analysis to separate signals and confirm a trend.
  • Moving averages conjointly play a significant role in serving with analytic thinking.
  • For example: If the security price is higher than the moving average, it shows the upward trend of a stock's worth. On the opposite hand, if it shows the price is below the moving average, it shows the downtrend of a stock price.

The RSI trading Indicator

  • The Relative Strength Index indicator could be a strategy that helps to spot the momentum happening within the stock prices likewise as overbought and oversold signals.
  • It will do this by observing the average profits and losses over a particular period, say fourteen days, and determining the positive and negative movement within the stock price.
  • RSI is showcased as a share that fluctuates from zero to a hundred on a scale. Once the indicator moves higher than seventy to below thirty, the market is called overbought and oversold.
  • Trend traders sometimes these levels in the variety of signals portraying that a trend might reach nearer to its maturity.

The ADX Indicator

  • Trend traders conjointly make the most of the Average Directional Index or ADX momentum trend trading methods to spot and analyze trends.
  • The ADX indicator helps the traders live the strength of given traders and allows them to estimate the security’s price strength in each positive and negative direction.
  • The line on the ADX indicator changes between zero and a hundred. If the indicator shows values from twenty-five to a hundred, it indicates that a robust trend is happening, whereas if values fall below twenty-five, it shows that a weak trend is happening

How to begin trend trading

  • Open an account.
  • Practice trading on a demo account.

Here are 2 different key steps to require before you begin trend trading:

Select a market to trade

  • Once a position is opened, it’s vital to initially have a plan of what you would like to trade. Whereas some trend traders would possibly prefer to concentrate on one specific market, others diversify their opportunities by spreading their positions over a variety of markets – gaining exposure to additional trends.
  • Once traders plan what they would like to trade, they will get to continue thus far with any developments that might drive new trends, or cause counter-trends.
  • These would possibly include breaking news, financial organization policy announcements, and political events.


Apply a risk management strategy

  • Most trend traders can utilize each stop and limit to save their trades. Limit close orders exit a position at a more favorable market value, enabling traders to lock in a profit.
  • Whereas stop-losses can close a position out the market moves against the position by a planned amount. As trend reversals will happen at any time, it's important to possess a risk management strategy in the situation.


  • Without correct preparation and risk management, even the most effective trading strategy won’t make you cash in the long term. It's vital to possess an inspiration for the markets you'll trade and the way you'll manage your risk
  • The best method to find out about trend trading, and using trend indicators, is to do them out for yourself and see that strategy works best for you

What focuses on investors' use to predict forex market movements?

  • The forex market is managed by macroeconomic trends that may typically take years for an investor to evolve.
  • There are four major forex currency pairs are EUR/USD (euro/U.S. dollar), USD/JPY (U.S. dollar/Japanese yen), GBP/USD (British pound/U.S. dollar), and USD/CHF (U.S. dollar/Swiss franc), but some realize chance by that specialize in different, less well-known forex currency pairs.