trend vs retracement,what is the difference

Age : 36 Joined : 14 Jan 2008 Posts : 4 Location : nigeria

hi stalion, big ups to your trading calls.i read most of the chatting in the chating room and was thrilled the way you teach.you meantioned something about trend and retracement during your conversation.please what is the difference?i mean trend and retracement on the chart

Joined : 23 Dec 2007 Posts : 241 Location : Nigeria

hi 50cents,
well, during live forex trading, most traders make a recurring mistake of mistaking trends from retracement. A trend occurs when price makes higher highs and higher lows(uptrend) or lower lows and lower highs(downtrend). while a retracement is a price movement in the opposite direction of the previous trend. Buy the dips, sell the rally refers to the retracements of an upward or downward trend..
a general observation of the markets shows that they do not trade in a straight line. There is always a struggle for control between the bears (sellers) and the bulls. In this struggle, each side enjoys victories and defeats.
For example, if a market makes a nice bottom formation after an extended downward move and then retraces up to a price where many chart readers believe the market will run into resistance, the bearish traders will move in and sell. The bearish traders believe that the trend is still down and this correction provides a good selling opportunity.

This, in turn, pushes the market down against the new uptrend.The result is a price correction(retracement). When this new uptrending market corrects or retraces, the price will pullback to predetermined natural support levels. These price levels tend to support any market in any time frame. By using these support levels, the trader can determine the most likely price where a correction will end before trading in the direction of the new uptrend.

The most common retracement level is the 50-60% level. This is where price has a tendency to reverse its run and continue its previous trend. So, in a downtrend, you sell the rallies, and in an uptrend, you buy the dips.
For a one-on-one training on these and other effective forex strategies,
Contact Stallion- stalionstable@yahoo.com or 2347035610861
www.forexgreenland.com