FOREX TRENDLINE
A trendline price line is made by connecting the market price lows in an uptrend and market price highs in a downtrend. It provides support and resistance levels for successfully placing market entry or exit orders.
Trading in the Forex market is a challenging opportunity where above average
returns are available to educate and experienced investors who are willing to take
above average risk. However, before deciding to participate in Forex trading, you
should carefully consider your investment objectives, level of experience and risk
appetite. Most importantly, do not invest money you cannot afford to lose.
There is considerable exposure to risk in any foreign exchange transaction. Any
transaction involving currencies involves risks including, but not limited to, the
potential for changing political and/or economic conditions that may substantially
affect the price or liquidity of a currency.
Moreover, the leveraged nature of FX trading means that any market movement will
have an equally proportional effect on your deposited funds. This may work against
you as well as for you. The possibility exists that you could sustain a total loss of
initial margin funds and be required to deposit additional funds to maintain your
position. If you fail to meet any margin call within the time prescribed, your position
will be liquidated, without prior notice to you, and you will be responsible for any
resulting losses. Investors may lower their exposure to risk by employing proper risk
management practices.Trendline Trading Strategy also allows you to get in at almost the beginning of
a new trend or start of market swings (tops or bottoms) or if you miss the
beginning, you hop in along the way and this makes it one of the best swing
trading systems simply because it does not involve indicators but just an
ability to trend a trendline and use that with price action alone.inetrading.com
Before I get you into the rules of the Trendline Trading Strategy, you
need to build a good foundation of understating how this trading strategy
works.
This includes:
• how to draw valid trendlines
• when is a trendline still valid and when does it becomes invalid
• understanding some common mistakes in drawing trendlines
• how to know which trendlines are most likely to hold and which ones
will not
• support and resistance and how to use them to your advantage
• understanding trends and know when they may be starting or ending
• technical analysis-the best way to analyse your charts without too
many indicators (matter of fact, you don’t need any indicator at all but
just price)
Having a good understanding of the points listed above is very essential for
the successful application of the Trendline Trading Strategy.
HOW TO DRAW VALID TRENDLINES
There are two types of trendlines, the upward (or uptrend) trendline and
downward (downtrend) trendline. How do you draw trendlines? Easy, in 2
simple steps. Here they are:
STEP#1: Identify obvious peaks and troughs.
STEP#2(A): Connect a minimum of 2 peaks (or highs) with a line from left to
right and you have a downward trendline.
STEP#2(B) Connect a minimum of 2 troughs (or lows) with a line and you have an upward trendline.
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