Sunday, January 17, 2010

Forex Trends

Forex Trends

Trends formed in different markets. For example stock market, commodity market, forex market etc. Trading with the trend is a proven method to trade any market, but it is particularly effective in trading forex market. Why?

Consider stocks in equity market. If a company is doing badly and its stock is trending downwards, the company can take measures to improve the situation. For example, the company can be restructured, CEO can be replaced etc. This can cause a rapid change to the company’s fundamental outlook which will sooner or later be reflected in its stock price. This process can happen in a fairly short period of time.

When we trade forex market we are trading the economies of entire nation. When a country’s economy is strong or weak, it usually takes a longer time for economy to recover.

Hence, forex tends to stay in a trend longer than other markets.

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