Forex Strategy and recommendations to Analyze Market Successfully A significant section of any traders'forex strategies is understanding the marketplace cycles. So what're market cycles? Not knowing what market cycle you are in will affect your forex trading. Knowing the proper major market cycles is important for you and which forex trading system you should be using. As each cycle requires an alternative approach from your own forex trading system. You can find three major market cycles and the capability to adapt to each cycle is an important part of one's forex strategy and will boost your profitability. So you'll need to discover how to determine the marketplace cycles if you want to develop into a successful trader. The three major cycles are: 1) Trending 2) Consolidation 3) Breakout The Three Market Cycles It generally does not matter what financial market you are trading, industry can just only move around in these three cycles. A common saying amongst forex trade is "The Trend can be your friend." Trending Cycle Trending is when the market price moves in the same direction consistently in a single direction either up or down. What sort of forex market trend is inherently defined? A development could be defined as progressively higher lows and higher highs. Needless to say if the price movement consisted of a straight line either up or down, then identifying a pattern would obviously be very easy. In true to life, currency prices move don't move in one direction consistently, so denying forex traders and easy trend read. Consolidation Cycle A Consolidation cycle also known as Non Trending or Ranging market, which looks like a sideways /
horizontal line of bars on a chart. Consolidating is when industry is struck between two horizontal support and resistance levels and cannot break these اﻻﺳﻬﻢsupport / resistance levels for at least seven bars. You need to use moving averages and other technical indicators to find out whether industry is consolidation or trending. In case there is a consolidating market, the moving average line will almost be horizontal. Breakout Cycle Now what is breaking out of a Consolidation? After the market has been consolidation for at the very least 7 bars and then your price sharply breaks out of this ranging market sharply to produce a new high or low. That's basically it for the cycles How does this affect your forex strategies...? Many forex traders only have a forex technique for a couple of market states. The most used forex strategies being Trends and Breakouts. But recent research indicates that an average of the forex market is in a trending cycle about 30% of that time period, breakout cycle about 10% of times and Consolidation for 60% of the time. So if your only forex strategy is for a trending cycle then you will simply be trading for 30% of times and if you are one of the few which have more than one forex strategy with common being the trending and breakout strategies, you then will still be trading only 40% of the time. What this means is you will be sitting on the sidelines for approximately 60% of the time. Whilst it is always important to really have the patience to wait and pick high probability trades, looking forward to the marketplace to change cycles because you don't have a forex technique for this cycle does not make sense. Some forex traders will then get sucked into making trades with the wrong strategy into market cycles that the strategy just will not work in. In 2010 in the July and August industry spent nearly all its amount of time in consolidation and breakouts with hardly any trends happening. A lot of traders I understand only did not need a technique for this sort of cycle so that they either lost money over these months or stopped trading altogether before marker started trending again. I was myself was in the exact same position. About mid way through July, I realised that my strategies where simply not cutting it in this cycle and I set about on developing my forex strategies so they included one technique for each cycle. Now I'm comfortable trading and making pips in every market cycles. So it is important to possess a set of forex strategies that cover all the market cycles. You should find out what the various market cycles are in addition to having correct trading systems. Meaning you must develop the skill of correctly identifying the various market cycles at the right time.
When you have the skill to identify the market cycles then it is essential to own pair of forex strategies which will cover each market cycle. As effectively identifying the marketplace cycles is just a skill that all successful traders have mastered. You need to learn how to adopt your method of those cycles to remain profitable.