Trend strength.

When trading Forex, you often hear the following phrase: “The trend has weakened, the probability of a reversal has increased,” and it becomes clear what this is for. To make money, you should open trades only when there is a strong trend.

The strength of the trend in Forex is the dynamics with which the price of a currency pair moves in combination with its liquidity and the volume of all transactions performed.

It is these indicators that should be analyzed to determine the sustainability of the existing trend and the likelihood of its change.

If you trade on the interbank exchange, then all the necessary indicators for trend analysis are publicly available; with Forex it is becoming more and more difficult, you will have to make some effort to obtain information.

• The speed of price movement is determined empirically, for example, by looking at how much the course has passed in an hour and comparing it with the average for the previous day.

You can also analyze the dynamics of movement on different timeframes. • Liquidity - the more popular a currency pair is, the higher its liquidity; the most popular instruments are usually those for which there is currently a rush of demand or supply.

Determining the latter is not difficult; just open the latest news and find the most significant events, and then draw a conclusion on which currency they put the most pressure on. • Trading volumes are a fairly important indicator; the growth in volumes confirms the existing trend.

You can obtain information about the quantity, and most importantly the volume, of transactions performed on interbank currency exchanges; sometimes individual Forex brokerage companies also provide similar data for their clients. • Fundamental factor - fresh news is also evidence of a strong trend, especially if it confirmed the current trend.

After determining and analyzing the listed indicators, we can say that a strong trend is observed when the following conditions are met:

1. The price moves faster than usual.
2. There is an increased demand (in an uptrend) or supply (in a downtrend) for a currency pair.
3. Trading volumes for this asset are at a high level.
4. Recently there was news that caused a trend reversal or acceleration of its movement.