This article looks at the use of foreign exchange rates trend prediction and anticipation.
When you trade on the forex market you are able to use trends to make a profit. There are two ways that you can determine the foreign exchange rates trends and this is through anticipation and prediction. It is important that you understand the pros and cons of each method. You should also consider which method you should be using. There are many traders who feel that anticipation will offer you better returns than prediction.
The Act of Trend Prediction
Trend prediction is the way that most traders will look at trends. There are a number of ways that you can predict the trends that could come in the market. The most commonly used way is through technical analysis. With technical analysis you are going to be looking at the movements of indicators and price patterns to predict the trends.
This is not an exact science and there are times when your predictions will be wrong. The prediction could be wrong because you analysed the market incorrect or because the market simply moved differently to what was expected.
Anticipating the Foreign Exchange Rates Trend
The foreign exchange rates trend can also be anticipated. Most traders will place the use of price patterns into the area of trend anticipation. The price pattern will tell you what should happen in the future and you will anticipate the trend. Many traders will also use the time of consolidation as a means of anticipating the trend.
The consolidation movements on the market will often come before a trend forms. These movements will be ranged movements which then break when the trend begins. It is possible to see consolidation movements before the trend that comes with forex news. Of course, you have to consider that there will not always be a period of consolidation and that the range could last for longer than you assume.
Making the Most of Anticipation
If you want to use trend anticipation when you trade you need to know how to make the most out of this. The primary factor to making the most out of this is to have discipline. If you do not have discipline then you are not going to wait for the right time to trade. This will cause you to open your trade before the trend begins and this could cause losses on the market.
You also have to consider the combination of prediction and anticipation when you trade. While many traders feel that the anticipation movements on the market are more concrete and concise they are not the same as prediction. When you predict a movement you should look for anticipation movements to determine whether or not your prediction is correct.
It is important that you also look at using confirmation tools when you anticipate the trends. Confirmation tools will help you when the trend starts as it will tell you about whether or not you should be trading on the trend. If the trend is not strong enough then you are not going to get the profits that you want from the market.
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