If you have been around the forex industry, you must have heard about this famous quote, “the trend is your friend.” As simple as it sounds, it is the biggest mistake you will make as a trader if you decide to go against it. Ask any trader who has gone against this statement, and the end is never pleasant. Indeed it is one expression that has stood the test of time.
In this article, you will learn everything learnable about trends in forex trading. You will discover the importance of trend, how it develops, and why it is a critical aspect of your success if you want to be a successful trader. Finally, you will learn about the supertrend indicator MT4 to help you identify a strong market trend.
Supertrend Indicator MT4 in Forex
A trend is a movement of price in a particular direction – upward, downward, or sideways. A sideways market is usually not a trend but referred to as a ranging market. Your ability as a trader to identify a trend and possible entry and exit areas are highly influential to your success in this market. Supertrend Indicator MT4 will be the right tool for you to analyze the market trends.
Type of trends
There are different types of trend. However, the bullish and bearish trends are the most commonly talked about in the forex market. A bullish trend occurs when the price of a currency price is moving from higher lows to higher highs. Therefore, a bullish trend line will act as a support level since the price is moving upward. Alternatively, a bearish trend is the movement of price from lower high to lower low.
New traders find it hard to identify trends, but once they understand the basic concept of lower high to lower low and higher lows to higher highs, the profits begin to rain it. When starting, most traders are impatient; hence they search for various indicators such as supertrend indicator MT4 to identify trends. Notwithstanding, the diagram below shows an uptrend and downtrend in the forex market.
Importance of Trend in Trading
Every professional trader knows that the forex market doesn’t have a single strategy with a hundred percent win ratio. Because of this, traders are continually looking for opportunities to improve the odds of their winning trades. The easiest way to do that is to identify a trend in the market.
The forex market is an imperfect world, and learning how to trade in it is essential. Trend trading plays a crucial role in identifying good areas of entry and exit. Having a perfect entry and exit point increases your win ratio. However, while many traders agree that “the trend is your friend,” we still have traders who go against it.
For instance, if a trader decides or unknowingly because of a lack of experience enters a buy order in a downward trend, that strong move is strong enough to wipe their account. In this case, you can’t overemphasize the importance of trading with the trend.
Using Trendlines to identify Trend
One of the easiest ways to identify a trend besides using a supertrend indicator MT4 is by drawing trendlines. With trendlines, you can quickly identify areas where price may bounce off and forth. These areas can be your dynamic support and resistance level pending when it price breaks that point to move in the direction of a more definite trend.
From the chart above, you can see a trendline connecting through many lows in an uptrend. Price retest the trendline by bouncing off from it and moving upward. Naturally, a trader can be 70% sure that as long as the trend is valid, the price will bounce off the trendline. With this, traders can go long, pending when the uptrend reverses.
Using Supertrend MT4 indicator to identify Trend
Implementing a trend strategy is essential as it comprises of different elements. However, besides using the supertrend indicator MT4, you can take advantage of the ADX indicator. The ADX indicator is widely used in combination with price action to identify the trend of the market. However, we have traders who prefer to use moving averages in tandem with ADX.
As already stated, there is no one rule to trading. You can try different combinations of strategies to find a workable formula. As time goes on, you can include more elements to increase your chance of spotting trends in the market. However, combining different indicators can be misleading and distort your judgment.
Build a long-term strategy before breaking them down into smaller bits. In this way, you can know what works and doesn’t. Additionally, never neglect fundamental elements when implementing a strategy because it can wreck your plans.
Impulsive and Correction Trends
When a currency pair moves in a trending market, two types of systematic prices may take place. These are related to the trend of the market. For a beginner, it is crucial to what a trend trading system entails. These two systematic price movements are called impulses or corrections.
An impulsive trend occurs when the price touches the trendline and bounces towards the direction of the trend. Most traders pursue this kind of trend because it leads to more significant price movement within a short period.
In forex trading, price doesn’t move in one direction. Trend correction always happens after an impulsive move before returning to the course of the current trend. Professional traders tend to trade the price correction because the movement is not quite attractive. It is during this period that new traders due to their inexperience pay dearly with their capital.
Conclusion Supertrend Indicator MT4
If you ask any professional trader about trend trading, they will all agree that it is the best means of making money in the forex market. However, the market is continuously ranging instead of trending, which is hard for most traders to trade. Those who find trends within these periods get themselves damaged because they lack a good strategy.
Additionally, if you misread price action, you won’t be able to identify when the market is trending. Nevertheless, the supertrend indicator MT4 is handy to help such traders.
Furthermore, we have developed the winning forex indicator that traders can easily rely on to make more profits. Our winning forex indicator is based upon identifying the trend and is amongst one of the best in the forex market. It has undergone various backtesting for the past 7 years on various forex pairs and timeframes. So this Supertrend Indicator MT4 has for sure a place in our Best Metatrader Indicators List!
Currently, this indicator only works with few currency pairs and few timeframes to generate a high probability of identifying a trending market. Therefore, finding the trend through this indicator is quite natural that even someone that starts forex today can quickly know when a market is trending. Take advantage of this indicator and increase the success rate of your trading.
And if that is not enough, there are a variety of tools present here, you can check them out through this link here.