If you have been in the forex market for some time, you would have come across this saying many times "the trend is your friend". Most of the time, traders who use this saying use it when they have made a loss in a counter-trading position.

Forex traders become very sad because they have lost a deposit, and again they were not part of the reverse trend movement which will have brought back the profits to the table.

In order for you to be successful with your trading, we encourage you take a look at some tecniques that will help you indentify when a trend is in place, with the use of indicators to drive your way to making reasonable profits from it. If you are a forex trader and you don't have a strategy inplace, then you might not be successful in forex trading.

The movement of prices of currencies have been shown to move in a trending pattern, because of long-term macroeconomic elements which moves these rates of exchange. These elements include interest rates, global trade imbalances, and many others.


Identifying a trend
With regards to the meaning of trend, it means a sustained market movement in a specific direction, which is either a uptrend or a downtrend. Many forex traders could give different and several meanings to what trend is. But to give a good meaning of trends, it is a predicted response to price at support/resistance levels which changes with time.

As an example, when there is an uptrend, the main visible feature is the rebound of prices when they reach levels of support, thereby creating new highs. In a downtrend, it means the same thing but in the opposite direction. As soon as you see this on a chart, it simply means there is a trend in place.


Now the major tool to identify this trend is trendline analysis. This tool (trendline analysis) is used to make an establishment of resistance and support levels for your market prices.

So in the next topic we will be talking about trendlines analysis fully, so that you can understand the use of technical indicators to identify such trends. They have worked for many forex traders, and it will surely work for you if you apply them correctly.

The application of these analysis are what guarantees you a smooth ride through your trend movement.

There are many advantages of trading Forex, and they will be outline for you shortly.

1. Execution costs
Other financial market will charge commissions for trade, but the Forex market does not. The cost of execution is the difference in price between the Bid/Ask. This is called the spread.

This spread varies from broker to broker.


2. Trendiness
There are usually trends in the Forex markets, which has been noticed and seen over time. The trend moves differs from one currency to another because they all have their specific uniqueness.

Once this trends are identified, moving with it can bring about great profits in the Forex market.


3. Focus
Unlike stocks and other financial markets where you have lots and lots of stocks, bonds, and others, the Forez market only concentrates on 1-4 currencies. The most common are the British Pounds, Japanese Yen, Swiss Franc, and the Euro. Successful traders will usually concentrate on just a few currency pairs, and beginners usually take one pair for their Forex trading.


4. Margin Accounts
Before the commencement of trading, you need to open a margin account. The margin account varies from broker to broker. Some require a high margin account of about $5,000, while some will require only $1,000.

Your trading period will also determine your margin account. If you want to hold a position for a day, it requires a low margin account, but if you wish to hold a trade for days, weeks, months, you should be expecting a high margin account.
All orders are to be carried out through a Forex broker.

Note: A margin account is just like a performance bond. To become a Forex trader you need a margin account. When profits are made, they are automatically deposited into your account, and when you make losses, they are also taken out of you account. This system makes it plain and reliable, as you can see your account balance yourself.
You should also be sure that your profits can get back to you, not just sit in your account. Forex brokers will usually advice that you withdraw profits from time to time to allow you gain confidence with the system.

When a trader withdraws his profit, he feels so comfortable and willing to trade more as to increase his account balance for the next withdrawal.

You profits can also get back to you in various ways. It can be wire transferred, or sent by cheques.

Forex trading in carried out in currency lots. Every lot is approximately 100,000 US dollars of foreign currency. In order to be a ble to carry out trades on Forex market, you must have a margin account with a Forex broker.

Actually, this is like a bank account from which losses will be subtracted and profits deposited. The use of this account is instant, that is as soon as you open or close a trade position, losses are subtracted and profits deposited.

There are different regulations on margin accounts depending on your Forex Broker. Many Forex broker will require about $1,000 deposit to begin day trading a currency lot. The meaning of day trading as the name implies is the opening and closing a trade position in one day.

For a long-term position, may Forex broker will require about $2,000 per lot deposit.
In contrast to stock trading and other market, you need at least 50% margin account of your intended stock trade. But in Forex trading, you can control a large lot with just a small margin account. This is done through leverage. As an example i can open a 2 lot position with just 2% of the worth value.

The execution quality of the Forex market is very perfect. Because of the liquidity of the Forex market, many trade can be opened and closed at the current market price.
Although slippage can not be avoided in Forex markets, just like all other fast moving markets, many Forex broker's software have tried to beat it. That is you are notified of your exact opening price just before execution, and you will be given the opportunity to avoid or accept the slippage.

Your trade positions are confirmed immediately, and the internet user only needs to print a copy of these confirmations for record purposes. There are also many sayings about internet Forex trading being safer than the telephone trading. This is because you see the price it is, and you can decide to accept or reject it.

Also the telephone trading also has its advantages. In the case of internet disconnection, telephone calls can be made to your Forex broker to help you close or open trades.

You can be sure that your account informations are secure because Forex brokers uses systems that are protected by firewalls.

Fundamental analysis is simply the examination and observation of the main elements that affects the economy of a specific instrument. This observation makes an attempt to forecast the action of price and market movement by simply analyzing economic indicators, societal factors, government policies, and many others with the market cycle. Looking at the forex market, you will discover that it is affceted by many factors which in turn enable analyst to forecast correctly the next market movement. In an instance, looking at a clock may seem very simple in order to tell the time, but a fundamentalist will tell you what brought about that time, and what it will be in the future. Sounds simple right?

Actually, forex analysis is divided into the technical analysis and the fundamental analysis. Most of the time, when you introduce yourself as a forex trader, they ask you if you are a technician or a fundamentalist, this is the situation of the market operation.

These two methods are interdependent. The fundamentalist will in a way also keep an eye of price charts, while a technician also rely on certain economic information and data, that affect the price of the market.

You can be certain that fundamental analysis will only give you a view of the conditions of the market and where it might be heading, but it won't give you an exact price market situation. Looking at this example, when you start to analyze an economic forecast of an employment report, you would be needing to understand the forces that bring about this change, but another important thing is getting to understand how it relates to developing a strategy that works for you on how to trade the currencies involved with your analysis. That is getting into the market, making profits and getting out of the market.

A forex trader that uses fundamental analysis understands that his analyses are right. By siply analyzing the interest rates, and excahnge rates of financial institutions which as caused by disasters, unemployment, and many other factors, he gets his conclusion and knows when to get into the market for profit making.