Monday February 18, 2019 - 11:38:12 GMT
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Do the Forex market repeat trends?
Many people wonder if the Forex tends to repeat the patterns that have been displayed before. There are debates and many professionals believe there is nothing new to these trends. What has come in the past will come in the future only in a changed form. The traders can get many examples where such repetitions have happened but an investor should have a clear understanding. Trading based on a hunch is not a smart idea in Forex. This article will try to explain if it actually happens with the trends. If the past patterns are repeated, there is nothing to analyze as all have been analyzed by the previous traders. If the trends do not repeat, there is the doubt how much changed a pattern can get.
Periodic price movement of the financial instrument
The things which go up must come down to a certain extent in near future. You will never find any stocks in the global market which has unidirectional characteristics. Due to the basic nature of the business industry, we see the major ups and downs in the price of a certain asset or stock.
The experienced traders in Hong Kong always look for repeated patterns in the periodic price movements. Based on the past trend, they look for the potential trading zone to buy stocks at the perfect price. Try to decipher the market pattern and you will be able to make a consistent profit from this market.
Jesse Livermore in favor of repetitions
This person can be regarded as one of the authority in currency trading. Over the years, few people have made a name for themselves and he is one of them. Livermore believed the patterns get repeated, if not the same but in half-nature. To know the reason behind his belief, we need to get behind how the price has moved over the years. For centuries people have been trading and the volatility has not changed much. As the actions are the same over the years, it is only expected that the trends will also repeat.
Let’s say a person can only get to work after achieving a specific qualification. If the requirement of the degree stays the same, we can expect the nature of the work has not been advanced over time. It has remained as before and when the past actions of the investors are occurring again, the patterns have no other choice but to show the movement of the past. What Jesse Livermore believed was, the volatilities only change a small amount. This amount does not significantly change the result. A trader can plan a strategy based on the previous analyses. Even many professionals also support this idea by saying, the art of trading has not changed much. The time has only moved but the techniques still are in use by the people.
Dynamic nature of the Forex market
However, many people may not agree and believe there is a new trend every time. It is hard to support the belief as not many analyses have been done to find the relation between the past industry and the present sector. Whatever the volatilities are, it is better to prepare for the future and develop a plan. The sector has indeed changed, an increasing number of traders are investing money, new countries have joined in the transaction and all these have given new shape to the currency trading. The old concept of buying at a lower price and selling higher does not work anymore. The traders need to be smart, think of all the possible situations and design the plan. If these thoughts are taken into consideration, a conventional person may also agree with this idea.
We are not going to give any opinion regarding this matter as it depends on the level of understanding of different people. If you think the pattern will repeat, trade in that way but we would suggest using precautions to protect the capital. If the mindset has been set to trade with changing trends, plan the strategy and place the trades. Develop a mindset and go for the goal.
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