Market trend decides if we have placed a profitable trade. Identifying the trend is very important in technical analysis. The two major terms that we will use very often in currency trading is Bullish and Bearish. It is very important to know the meaning of these terms and not to get confused.
In simple words, a market where buyers are more than sellers. A bull market tends to be associated with increasing investor confidence, motivating investors to buy in anticipation of future price increases and future capital gains. During a bull market, it is suggested to buy currency pairs.
In simple words, a market where sellers are more than buyers.While there’s no agreed-upon definition of a bear market, one generally accepted measure is a price decline of 20% or more over at least a two-month period.During a bear market, it is suggested to sell currency pairs.
1. Which type of charts Am I going to use for trading?
2. Am I going to trade for long period or short period?
If you check the 4 hour chart for the same day, it might have given you a different idea. The 4 hour chart could have indicated that the market is bearish. Which means if you had traded EUR/USD using 30 min chart and waited for long hours the analysis could go against you. It is always better if you can trade with the chart. If you had closed the trade within 1 hour, you would have ended up with profits. I hope I made my point here. If this explanation is not clear please feel free to buzz me ask!
It is always suggested that you trade longer period chart, a min of 1 hour chart so that you get a clear idea of the market on that particular day.
- Analyze longer period chart for a better analysis.
- Buy currency pair when the market is bullish.
- Sell currency Pair when the market is bearish.
What is a Bullish Market?
In simple words, a market where buyers are more than sellers. A bull market tends to be associated with increasing investor confidence, motivating investors to buy in anticipation of future price increases and future capital gains. During a bull market, it is suggested to buy currency pairs.What is a Bearish Market?
In simple words, a market where sellers are more than buyers.While there’s no agreed-upon definition of a bear market, one generally accepted measure is a price decline of 20% or more over at least a two-month period.During a bear market, it is suggested to sell currency pairs.Bullish or Bearish - Which is best to trade?
Both are good. Always go with the trend. It is very important to play along with the trend to place profitable trades. Mostly trends are determined with the help of technical analysis i.e. charts. It depends on which type of chart you are using to analyze the market. For example, you may use a 30 min chart to analyze and find that the market is bullish. However, if you analyze using a day chart, it might show that the market is bearish. So, when you decide on placing trades the important informations you should be clear with are,1. Which type of charts Am I going to use for trading?
2. Am I going to trade for long period or short period?
Why trading period and chart play an important role in placing profitable trades?
For example, you are trading the 30 min chart of EUR/USD and after doing immense analysis you find that the market is bullish and buy EUR/USD. After say 8 hours you come and see that you are on a loss. Why? you did the analysis correctly and what happened suddenly?If you check the 4 hour chart for the same day, it might have given you a different idea. The 4 hour chart could have indicated that the market is bearish. Which means if you had traded EUR/USD using 30 min chart and waited for long hours the analysis could go against you. It is always better if you can trade with the chart. If you had closed the trade within 1 hour, you would have ended up with profits. I hope I made my point here. If this explanation is not clear please feel free to buzz me ask!
It is always suggested that you trade longer period chart, a min of 1 hour chart so that you get a clear idea of the market on that particular day.
Conclusion:
- Always go with the trend.- Analyze longer period chart for a better analysis.
- Buy currency pair when the market is bullish.
- Sell currency Pair when the market is bearish.
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