Along with levels (Support/Resistance), the trend is considered the most reliable indicator that traders can use in future price analysis. This is a simple signal but can offer you a win rate of up to 80% during trading. Today’s article will show you how to identify and use trends during trading in Binomo. Stay tuned!
What Is Price Trend?
The direction of the price over a certain period of time is called the price trend within that time frame. Upon determining the price trend, you can what the next movements of price are. From that, you can get an accurate idea of its behavior.
In general, prices will have the following three types of trends.
Sideways Price Aka Sideways Trend (Taking Most Of The Time During A Session)
Within a given time frame, prices create peaks and troughs that are equal or nearly equal. In this trend, prices may have different strong and weak fluctuations but they will generally go sideways. Often during this trend, we should not trade, or we should only trade with some reversal strategies.
Bullish Price Aka Uptrend
With this trend, the following peaks and troughs are higher than the previous ones respectively. Troughs will be reversal points in preparation for making new peaks.
Bearish Price Aka Downtrend
In contrast to an uptrend, the following peaks and troughs are lower than the previous ones respectively. Peaks will be reversal points in preparation for making new troughs.
How To Identify A Change In Price Trend
Changes in trend may vary as follows:
- Uptrend (or Downtrend) => Sideway.
When the price is in an uptrend, the following peaks and troughs are higher than the previous ones. However, when an uptrend is over, the following peaks and troughs are equal to the previous ones. This signals a change from an uptrend to a sideways trend.
It is the same for a downtrend.
- Uptrend => Downtrend and vice versa.
This is a sign of price reversal.
For example, After a downtrend, the following peaks and troughs are higher than the previous ones respectively. An uptrend is formed.
- Sideways trend => Uptrend (or Downtrend).
This is a price break out, also known as a break out of levels which creates a trend.
When the price is in an uptrend or a downtrend, the line connecting peaks (in a downtrend) or troughs (in an uptrend) is called the Trendline. This is a line with a lot of applications in trend trading in Binomo. However, in a price trend, we cannot always draw this Trendline. So in case, the Trendline is available, consider it an ideal condition for trading.
How To Trade With Price Trends
The principle of this strategy will be identifying the main trend (uptrend or downtrend). Then, wait for signals to confirm the continuation of the price trend.
In this article, we introduce you to signals to identify special Candlesticks and candlestick patterns. Let’s take a closer look at the following 2 examples.
- Prices in an uptrend: Only open UP orders. Prices in a downtrend: Only open DOWN orders.
- Open orders of 15 minutes or more using a 5-minute candlestick chart.
Regarding an uptrend
Regarding a downtrend
Open DOWN orders = Downtrend + bearish reversal candlestick patterns (Bearish Pinbar; Evening Star; Bearish Harami, etc.).
Trendline or price trends are extremely good tools in trading. You need to know it well to be able to use it smoothly. Practice with trends on a demo account carefully to have the best experience. In the following articles, we will build advanced strategies with this indicator. Good luck.