Should You Go For Trend Direction Or Support/Resistance?
September 24, 2009 by admin
Filed under Forex Systems
Should You Go For Trend Direction Or Support/Resistance?
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There are several traders who struggle with the thought about whether they should go for the direction of the trend of choose support or resistance. To know the answer, one must first know the difference between these choices. This is because in order for one to succeed in the forex market, he should have proper training and knowledge. While it is true that even newbies can succeed here, there are times when losses are inevitable. To avoid this occurrence most of the time, you will need to understand the different factors that affect this market and the other important issues associated here. This way, you will find that this can be your source of constant cash flow.
Before trading, you will need to comprehend the technical analysis regarding the forex market as well as identifying the trend. Technical analysis begins by distinguishing the support and resistance level of the trade. So what is a trend? In simple terms, this is the basic direction of the market concerning where it is heading to. The trending patterns allow the trader to know what the real market participants are going through and how they will be able to respond o the proper strategy in trading. This is usually helpful knowing that this helps the individual to know the psychology of the forex market and how the members are reacting.
Every market moves in small periods of highs and lows. From the overall direction, one will be able to determine the current trend in the market. These highs and lows by the way are the support and resistance. When it comes to support, this is displayed on the chart as something where buyers are more important than the sellers. Purchasing interest is sturdy enough so that the price will not move down so that it will go up again. Resistance is the opposite of support. Here, the price of the currency is above the market and thus, the selling pressure overpowers the buying process. The buyers will find it hard to hike up the cost of the currency.
Now, back to the question: which is more important, trend or the support and resistance levels? For several traders, they actually go for the trend. This is because it goes on and drives the support in a downtrend while resistance is in an uptrend. In addition, most of the time, the traders who pick the support and resistance as their choice in strategy pick the wrong side of the forex market. They will have to cover their losing position so that they will reduce the losses they have incurred.
Nevertheless, there are others who choose support and resistance. As long as you know what you are doing in this market, you can avoid all the risks that will fuel up the fire on your deficits. Trend, support and resistance are the fundamentals of technical analysis in the forex market.
You might want to chek this youtube video on how you can determine which way the market will go before any trading session.