The three stages of the Forex Market
Many Forex traders face problems knowing the market trends.
In the beginning, you need to be fully aware of trading trends, in order to know the market well.
In this article, we will explain ways to know the trends of the trading market.
Through 3 main phases, you can understand the movement of each major price trend.
You must apply these stages to practical experience in trading.
A trend is the movement of price from one point to another point without a return or the occurrence of a consolidation area during the movement.
The main trends in the Forex market consist of three phases.
Forex and a sense of imbalance
And in every direction of the price the first stage is created in Forex, and this is because there is only one set of orders directed to the market.
These orders play a large role in the volume of orders in the market, leading to the emergence of a trend.
For example, if the EUR / USD currency pair is in an uptrend.
This pair generally indicates that there are more purchase orders that entered the market, which exceed the sell orders.
In order for the market to head towards the downside, it needs to increase sales volume by a larger number of traders who placed orders.
That caused the forex market to head bullish.
But if the opposite thing happened, which is the increase in the rate of sales orders to be sufficient to meet the market requirements.
This will make all purchase orders met and the market will not be able to continue moving up.
Thus, the purchase orders, which will rise above the buy orders, will rise, making the market price begin to decrease.
You should be wary of this, because the imbalance stage occurs at the beginning of each direction in the market, and that is far from any time frame in which the trend can occur.
Liquidation of positions in the Forex market
Liquidation of positions in the Forex market is a concept or term used at the time a trader closes a losing trade.
Most of the time, liquidation occurs as a result of the market touching the stop loss level.
Sometimes the trader closes the deal manually, to meet other causes in the market.
The liquidation stage comes as a result of an imbalance, and this imbalance occurs in the first stages.
The result of this imbalance in trading orders is the payment of traders with losing trades.
To close their positions which were placed in the opposite direction, in which the defect occurred.
When these traders close their losing trades, there will be an increase in market orders.
In this way, the market price will be pushed further down.
Where the duration of the movement resulting from the liquidation stage stops.
The number of traders with trade deals opened is reversed in the direction in which the defect occurred.
Awareness stage in circulation
As for the awareness stage in the Forex market, it is a reaction to the market movement resulting from the first and second stages.
After completing the first and second stages, you will have to move the market far enough.
At this point, traders can determine the current movement, considering that this movement is a new trend, and then start placing other buy or sell deals.