Online Currency Trade

Cycle Trend

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There are normally four stages of a trend that are commonly accepted. These four stages formed a cycle and with every cycle has small cycles within.

No matter what trade you like to make, whether it is a 5 minute chart or even a monthly chart. Every market is included in some of the stages of the cycle.

Before making a trade, you should at least have an idea of where the market cycle is heading. This can help you from making the wrong entry for the trade. Let us take a closer look at these four stages.

Stage One This is the beginning of the cycle, and this is where every little thing can happen and generally, the market is flat. The market is ordinarily swaying in a positive range at this stage.

After this stage ends, you will often see breakouts of the former range. This breakout can frequently be explosive especially if it has been combined for a period of time. This can measure the volume; increase of this is a signal that the breakout is real for markets.

Stage Two This is the next stage after the breakout happened and then traders begin to head North. This will depend on the move of the market's force, they may rally and then never return to any of the breakout points or it may return and run a test for that area.

For aggressive types of traders they would already have acquired a position on the breakout and then add to the position, this is an ideal chance to jump in if the trader hasn't entered the market yet.

In stage two, it continues to make higher peaks and they may come back to test the average move within a few times.

Stage Three This is the final driving force of the cycle. As the trend starts to run from the stream, you will notice a double top building.

Stage Four This is the final stage and maybe the most interesting of the cycle. This depends on the condition of the market and traders now may go short. This stage can be very difficult since the market can either continue going down or go into consolidation.

This should help you in doing some trading. The first thing that you should do before entering into a trading business, is to decide where in the four stages of the cycle are you. In stage two, remember that it is dangerous to enter short, hence, the market will not go up forever.

On the contrary, if traders enter in stage four traders wouldn't want to be long either. Just by determining the various stages of the market can help traders lock in earnings and they can make better judgment calls and decisions on whether they should be joining the market or maybe give traders clues for exits and entry points.