How to Determine the Trend?

Greetings to everyone on the forex portal tradelikeapro.ru. In my Price Action video lessons, I often repeat: "trade only with the trend," "opening trades with the trend increases the chances of a successful trade," and so on. But how can you determine this very trend?

A trend is the general direction of market movement. No market moves strictly in a straight line, so we need to identify the overall tendency: upward or downward.

Opening a trade in the direction of the trend helps increase the chances of success. Of course, Price Action setups against the trend also work, at times quite well, but by trading only with the trend we can be more calm, since the risk of taking a loss is significantly reduced.

There is a huge number of forex indicators, systems, and theories for determining the current direction of the market trend.  But Price Action trading implies specifically abandoning indicators, tracking the market situation based only on the behavior of the main indicator, the price itself. Therefore, when determining the trend, we will also be guided only by price, proceeding from the most classical interpretation of trends in the forex currency market.

An uptrend is a series of rising peaks and troughs.

Based on this rule, we determine whether there is a bullish trend in the market. As soon as the rule of rising highs and lows is broken, we look for selling opportunities.

In an upward market, after a break of the previous low, one can consider a possible trend change to bearish.

A downtrend is a series of falling peaks (highs) and troughs (lows).

From this we derive the rule:

A reversal of a downtrend can be discussed when the market has broken the previous high.

A rather important point: if you cannot understand what the trend is right now, and this often happens during consolidation periods, when the market moves horizontally, then simply do nothing.

Very many people make the mistake of believing that they must always trade. No, under no circumstances. If you take only the "beautiful," clear, and understandable setups, it will be much more profitable than trying to snatch every single point. Be selective in your trades; if you do not understand where the market is moving right now, do not trade, wait until the situation becomes clearer.

As we already said at the very beginning of this article, the market does not move in a straight line. There will always be periods of pullbacks and consolidation. It is precisely during such periods that you should enter a position, guided by the main direction of the trend.

Yes, sometimes Price Action setups also form on impulsive moves and perform well, but entries on pullbacks are safer and ultimately more profitable.

That is all, thank you for your attention. And remember: "The trend is your friend" :)

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