The image below will show you the basic mechanics of a trend with its respective price impulses and corrections: As seen in the daily graph above each time the NZDUSD has moved temporarily lower, it has found support prior to moving on to higher highs. Thank you for the great article. Develop your trading knowledge with our expert-led webinars and in-person seminars on a huge range of topics. Sachith September 9, at
Foreign exchange or Forex trading is basically trading that involves the profits generated from fluctuations in the currencies of different countries and their exchange rates. To explain it further for the layman, I will explain it as follows.
As we discussed previously, a trending market will tend to surge in one direction and then slow down and either consolidate in a sideways manner or retrace lower or higher, depending on what direction the dominant trend is. My primary mission as a price action trader is to watch for obvious price action setups that form after a market retraces back to a confluent level in the market. This can be a swing point like we discussed above, a moving average level, or some other support or resistance level.
By value, I mean from an optimum point in the market that has proved significant before. I use them as a general guide and a helper to find confluent points in a market. For example, often the 21 day EMA will align with a swing point in a trending market, this would be considered a confluent level since you have multiple factors lining up together. Then, if we see a price action signal there, we know we are seeing a setup form in a very high-probability area on the chart.
We only use them as a helper to see dynamic support and resistance levels to add confluence and for trend direction. Instead, we want to enter closer to key market levels, swing points, EMA levels confluent levels in the market…always with confirmation from a price action signal. One aspect of trend trading that I want to touch on briefly is that trends in Forex tend to differ from those in other markets, especially equities.
In Forex, bearish and bullish trends are typically equally as violent and potent…whereas in equity markets we tend to see slower moving price action in a bull market, along with lower volatility. Down-trending markets tend to be fast and volatile in equity markets. Forex trends tend to be the same in their volatility and price action whether the trend is up or down. Thus, in Forex, your trading strategy and plan will generally be the same for both up and down markets.
In the equity markets, traders typically need to adjust their strategies or systems as a market moves from bull to bear or vice versa. Take advantage of trends when they happen — There is never anything concrete with trends…meaning you never know how long they will last for, so try to take advantage of them when they do occur.
The trick is to learn how to identify a trending market so that you can get the most out of it and get on board as early as possible. Trend following is a large part of my Price Action Forex Trading Course and of my general trading strategy. Thank u mr for the lesson,as am still new i do get you point here and ther, what make me confuse is the price different.
If it is not like this, we shall not understand u, and we shall look for similar information in our native languages. Plz try to understand this and try to solve the problem of a lot of students of your fantastic price action. Nail, I have learned something from this lesson and am willing to start with visual power to look out for trends very well before any trade ambition. Hello Nial, You have a brilliant and unique way of teaching forex trading which makes you stand out from the crowd.
And anyone who really wants to take forex trading serious needs your lessons which I think are priceless and generous of you to give. Thanks and God bless you. Thanks for the trading formula.
It will be helpful and effective. Straight to the point to keep focused on choosing quality trade set ups. To me your teachings has being remarkable so far. I will be trading real money next month but unfortunately starting with just dollars account. Though I already had the knowledge of japanees candle stick signals but your teachings has really made me to know key areas to use them on daily time frame,one trade per week,at confluence level and strong money management which I have decided to risk just 20 dollars per trade per week to make 40 or more out of my dollars account.
Nial indeed I can really confirm you are truly a prof in the world of forex and if I really succeed in it,its in fact directly as a result of your lack of greed in disclosing to the world the best way to make it in forex. Ones more thank you so much. Perhaps I will let you know my progress when the time comes.
I m still reading thru n trying to implement these into my demo account. I hpe to get it right soon. Nial you are the Main Man! Thanks you for this email , it is very fruitful to me, call it mental Armour! Thanks you Nial God bless you over and over! You are an indeed good mentor I have ever seen that expose the Golden mystery of forex trading. A million thanks to you sir. Excellent article, thanks Niall. I have been following your site for the last few months. Although only trading with a dummy account, I made a profit in the last 5 months by only following your basic price action strategies.
Eager to enrol on your course when my live account is set up. Nial like to thank you for the nice article on trading trends. A good article on trend trading…you told about price values as deterministic factor to make an entry but would like to know when to exit before the retracement and how to find it…Thank you very much.
Thanks Nial, for the great article as evidenced by all these comments. Now that we know how to identify a trend lets put our knowledge into practice.
The challenge is that trends not as common as we would want them to occur! Lets also add patience to the mix and sharpen the Sniper mentality. What I like to do is look at the Forex market in real time and see the raw trend. And i would like to be professional and inspirational as you are or even better if i may say.. Thank you to sharing this article. I follow your site every day that help me for trading in the market. Now i am a perfect trader of price action.
All of your articles carefully study week and put into practice. I believe in a positive result. Your article is fundamentally changed my attitude to the trade. My heart was calm and quiet confidence in the results. Your words about trend are very important for me. I am brazilian, so, my english not is very expansive.
I love that part. Thanks Nial for this Great Article. May the Lord God of my fathers continue to bless you in Jesus Name. Thanks Nial, you are the best…. As I practice in my trading, I will not trade until I confident with the price direction trend. I am currently trading only pin bars in trending markets and this article has given me insight into my way of trading.
You continue to build a great resource library that is growing in knowledge and if used appropriately will turn to gold! Thanks very much Nial, I think without your web I would be stucked on nearly the same place where I was before I found it about half year ago. Thanks Nial, great article. I love this way of trading with the inside bar strategy. But patience is the key here. Thanks loved this article heaps.
NOW I know why all my profits are gone before I can even start bragging about making them! Excellent article, direct and concise on how to identify the trend. Thank you once again. As you said, many times I have given back my profits in the retracement period.
Great article as usual. After a year of hard work and many hours of learning I can say with confidence, that You are probably the best teacher that one can find on the internet, price action is the best way to trade, and indicators create only confusion in market analysis.
Take care and best of luck to You. Your article is really amazing. At this position whether we have to wait for the confiirmation of the uptrend continuation or we have to decide tat the trend ends up and the downtrend started? Grow up to be patient enough to sit tight and wait for this triple combination. What an excellent information for us to clarify and make our mind clearly while we are trading.
Many thanks Nial, you have a articulate way of explaining your approach to trading. This transfers into my enthusiasm for your next posting. I look forward to your next lesson. Another great lesson Nial. When I change from 1hr to 4hr to daily it seems to throw out of wack the support and resistance levels. Can you use the same techniques described in this lesson to scalp trades on shorter time frames eg. Thanks my inbox is so full of e mails but for some reason yours is not deleted I read it all with intrest thank you.
Estou aprendendo muito com os seus artigos. Gostaria de fazer o seu curso. I guess this really is one of the harder things to learn, when is it a good time to trade? Is it a trend, or is it choppy?
We can see how the different setups looks like, IB, Pinbar and Fakey, but where is it ok to use them? Nial, thank you for this excellent article. Each and every article you post here is better than the previous ones, which are, without exception, also very useful. I learned so much with the above lesson. The 21 EMA as a guide to swing points and taking advantage of trends, when they are present, are great pieces of advice.
This very article can change some bodies life forever… Nial, more grease to your elbow. Nial,you are a great teacher…Thanks for sharing your knowledge, experience and observations here with us…. Nial it took me 4yrs to finally get what you have been saying all these years. A couple of days ago I was watching an old interview of you and the lite bub came on in my head it was one of those moments where everything came full circle…..
I so get it now……. Thanks a lot Mr. This is a free lesson very valuable at all time to me and may be other forex traders. The support and resistance you have been talking about have shown its perfect us in this lesson. Cheers Niall , another excellent article , very well researched , explained and written. Thanx for all your efforts once again. Your email address will not be published.
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Characteristics of trending markets Trending markets tend to make strong moves in the direction of the trend followed by periods of consolidation or a counter-trend retrace before the next leg in the direction of the trend. Trading from value in trends My primary mission as a price action trader is to watch for obvious price action setups that form after a market retraces back to a confluent level in the market. Final notes on trading with trends: Finally, I leave you with this little formula: Good trading, Nial Fuller.
Checkout Nial's Professional Trading Course here. Dear Nial, Thanks so much for your great lessons. Many thanks for helping us and all the best Reply. Chester March 23, at 8: The article was great and easy to understand, Iam going to follow you all the way!!!
Simy Sadoun November 23, at 9: Thank you for this article, Nial. R B Dube August 22, at 5: I like it Reply. Sulaiman Bhadmus July 7, at 4: Kris June 21, at 5: Endurance August 10, at 1: Sunday August 5, at 7: Thank you for all your teachings, they have been wonderful. Thandeka June 28, at 7: You are the best Nial thank you, your teachings make my future looks bright.
God bless you man Reply. Thanks for the knowledge……. Really profound strategic lessons. One day trading part time. This is one of the few articles that changed the way I view price action. Lucky May 11, at 5: Traders without sufficient trading experience should stay out of the market when the price is in a correction phase.
The reason for this is that corrections are relatively smaller and often last longer than the trend impulses. Why take a position for less profit potential, and for more time risk in the markets? This is definitely a riskier initiative. The image below will show you the basic mechanics of a trend with its respective price impulses and corrections: The period is May, — June, The red bullish line on the chart is the respective bullish trend line. The green arrows indicate the price impulses and the red arrows indicate the corrections of the trend.
Notice that the trend impulses lead to relatively bigger price moves in the direction of the trend. Contrary to that, the corrections are small. The third correction on the chart has approximately the same duration as the last impulse, and later leads to a breakout in the trend.
At the same time, the price move it creates prior to the breakout can be described as a tight consolidation. Before you prepare to trade a trending setup, you must first be able to recognize that a potential trend is underway.
This is a basic component to any Forex trend trading system. So, now that we realize the benefits of trading a trending move we have to create some solid rules to pinpoint a potential trend trade setup.
We will discuss a few trading techniques for spotting potential trends on the chart. Yes, we repeat this again, because price swings are the basic characteristic of every trend on a chart. If the tops and bottoms are increasing, we have a bullish trend. If the tops and bottoms are decreasing, then we have a bearish trend. In all other cases, we have a non trending environment, — a sideways market. Every two points on the chart could be connected with a straight line. However, if a third point lines on the same line, then we have a tendency.
In this manner, the trend confirmation usually comes after the price tests the trend at the third touch, and bounces from it. When you see the bounce, you can enter an open a position attempting to catch a new trend leg.
The arrows on the chart show the places where the price tests a bearish trend. The green arrows indicate the price impulses and the red arrows show the corrective moves. The first two arrows pointing to tops on the trend are black. These are the first two points used to draw a trend line. Now we would sit tight, and wait for price interaction at the third touch. The third arrow on the trend is blue. You will notice a strong bearish response off the trend line.
This would be considered our trend confirmation and prepare us for a short position. The fourth arrow is also blue, because the trend is already confirmed. In this manner, a return and a bounce from the trend would give us another trading opportunity. The two short trades in this case both create a trading opportunity, though the 3 touch in general will typically provide a better return to risk ratio.
Volumes are helpful for identifying emerging trends. The reason for this is that in many cases the Forex pair will start trending after the volumes have increased. In this manner, the impulse trend moves appear during higher trading volumes. Corrections on the other hand appear during lower trading volumes. When volumes are high, there is a lot of action in the market. Therefore, high volumes are offer insights into emerging trend impulse waves. This is the same trend from the second example in this article.
Notice that the trading volumes pretty much respond to impulses and corrections as shown with the arrows above. The trend reversal comes afterwards.
However, using the Volume indicator with the understanding of this limitation in mind, can assist you in your trend analysis nevertheless. Since you are now familiar with the process of identifying trends on the chart, it is now time to discuss a way to take advantage of trading currency trends.
We will now exhibit a trend trading strategy, which is straight forward and relatively easy to implement. We are going to use an assistant indicator to support our trend trading strategy. When the faster line breaks the slower line in bearish direction while being located above 0, we expect the price to start trending in bearish direction. When the faster line breaks the slower line in bullish direction, while being located below 0, we expect the price to start trending in bullish direction.
The MACD indicator also has a histogram. This histogram displays the exact difference between the faster and the slower line. If the histogram is positive, then the faster line is above the slower line — long signal. If the histogram is negative, then the faster line is below the slower line — short signal.
The Moving Average Convergence Divergence is also good for spotting divergence between price and the indicator.
If the price is increasing and the MACD is decreasing, then we have a bearish divergence, which indicates that the trend is likely to reverse. The same is in force but in the opposite direction for a bullish divergence pattern. If the price is decreasing and the MACD is increasing, then we have a bullish divergence.
1. The Highs and Lows Tell the (Whole) Story
The first step to trend trading is to find the trend! There are many ways to identify the GBPUSD trend pictured below, but one of easiest is through identifying if price is creating higher highs or higher low. The last method is to use trend lines. When a major trend line is broken, a reversal may be in effect. By using this technical tool in conjunction with candlestick chart patterns discussed earlier, a forex trader may be able to get a high probability of a reversal. However, the point of implementing forex trading rules for myself is take a lot of the subjectivity out of trading. I don’t want my feelings or biases to take control of my .