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Market Environment 市场环境: Page 2 of 6

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What is a Trending Market?

A trending market is one in which price is generally moving in one direction.

Sure, price may go against the trend every now and then, but looking at the longer time frames would show that those were just retracements.

Downtrend

Trends are usually noted by “higher highs” and “higher lows” in an uptrend and “lower highs” and “lower lows” in a downtrend.

When trading a trend-based strategy, traders usually pick the major currencies as well as any other currency utilizing the dollar because these pairs tend to trend and be more liquid than other pairs.

Liquidity is important in trend-based strategies. The more liquid a currency pair, the more movement (a. k. a. volatility) we can expect.

Check out Huck’s EUR/USD win from following the trend.

The more movement a currency exhibits, the more opportunities there are for price to move strongly in one direction as opposed to bouncing around within small ranges.

Other than eyeballing price action, you can also make use of technical tools you have learned in previous sections to determine whether a currency pair is trending or not.

ADX in a Trending Market

A way to determine if the market is trending is through the use of the Average Directional Index indicator or ADX for short.

Developed by J. Welles Wilder, this indicator uses values ranging from 0-100 to determine if price is moving strongly in one direction, i.e. trending, or simply ranging.

Values more than 25 usually indicate that price is trending or is already in a strong trend.

The higher the number is, the stronger the trend.

However, the ADX is a lagging indicator which means that it doesn’t necessarily predict the future. It also is a non-directional indicator, which means it will report a positive figure whether price is trending up or down.

Take a look at this example. Price is clearly trending downwards even though ADX is greater than 25.

ADX greater than 25 usually indicates a trend

Moving Averages in a Trending Market

If you’re not a fan of the ADX, you can also make use of simple moving averages. Check this out!

Place a 7 period, a 20 period, and a 65 period Simple Moving Average on your chart. Then, wait until the three SMA’s compress together and begin to fan out.

If the 7 period SMA fans out on top of the 20 period SMA, and the 20 SMA on top of the 65 SMA, then price is trending up.

Moving averages in an uptrend

On the other hand, if the 7 period SMA fans out below the 20 period SMA, and the 20 SMA is below the 65 SMA, then price is trending down.

Moving averages in a downtrend

Bollinger Bands in a Trending Market

One tool that is often used for range-bound strategies can also be helpful in trend discovery. We’re talking about Bollinger bands or just Bands.

One thing you should know about trends is that they are actually quite rare. Contrary to what you might think, prices really range 70-80 percent of the time. In other words, it is the norm for price to range.

So, if prices deviate from the “norm” then they must be in a trend right? What is one of the best technical tools we have mentioned in the previous grades that measure deviation?

If you said a ruler, we give you mad props for effort.

If you said Bollinger bands, we’ll give you cyber milk and cookies! Here, take some.

forex trending market

Bollinger bands actually contain the standard deviation formula. But don’t worry about being a nerd and figuring out what that is.

Here’s how we can use Bollinger bands to determine the trend! Prepare for the craziness.

Place Bollinger bands with a standard deviation of 1 and another set of bands with a standard deviation of 2. You will see three set of price zones: the sell zone, the buy zone, and the “No-man’s Land.”

Using bollinger bands to identify trend.

The sell zone is the area between the two bottom bands of the standard deviation 1 (SD 1) and standard deviation 2 (SD 2) bands. Bear in mind that price has to close within the bands in order to be considered in the sell zone.

The buy zone is the area between the two top bands of the SD 1 and SD 2 bands. Like the sell zone, price has to close within the two bands in order to be considered in the buy zone.

The area in between the standard deviation 1 bands is an area in which the market struggles to find direction. Price will close within this area if price is really in “No-Man’s Land”. Price direction is pretty much up for grabs.

The Bollinger bands make it easier to confirm a trend visually.

Downtrends can be confirmed when price is in the sell zone.

Uptrends can be confirmed when price is in the buy zone.

如何确定趋势市场

       趋势市场意味着价格通常沿着单一方向波动。

       当然,从短时间来说,价格走势可能和趋势整体方向背道而驰,但是,从更长期走势来说,这一走势只是汇价的短期回撤。

       上升趋势的典型特征是:高点不断抬高,且低点不断抬高;而下降趋势的典型特征则是:高点不断降低,且低点不断走低。

       当进行趋势交易时,交易者们通常会选择主要货币对,以及其他直盘货币对,因为这些货币对趋势明显,且较其他货币对流动性更高。

       流动性对趋势交易策略来说非常重要。货币对所具有的流动性越大,我们能够预计的波动性也将越大。波动性越大,货币对朝单一方向运行的势头将越强劲。

       除了盯住价格走势外,你也可以借用你在前面课程中所学到的技术工具,来确定某一货币对是否呈现出趋势走势。

ADX指标在趋势市场中的运用

       确定市场是否处在趋势运行中的一种方法是使用平均趋向指标(ADX)。

       ADX是震荡指标中的一种。它的值介于0-100之间,该指标用来确定价格处在强趋势之中或仅仅只是处在区间震荡中。

       指标读书超过25通常意味着价格倾向于或已经出现强趋势走势。

       读数越高,趋势越强。不过,ADX指标是一个滞后指标,这意味着该指标并不一定能够预测价格未来走势。该指标也是一个非方向性指标,这意味着不管价格处在上升趋势中还是下降趋势中,该指标都会提供读数为正的数据给我们。

       如下图所示,尽管ADX指标读数高于25,但是价格明显处于下降趋势中。

移动均线在趋势市场中的运用

       如果你并不是ADX指标的粉丝,你也可以使用简单移动均线。让我们来看看!

       我们选择在技术图形中使用7、20、65简单移动均线。等到上述三条简单移动均线聚集在一起,随后呈扇形状散开。

       如果7 SMA上破20 SMA,且20 SMA上破65 SMA,那么价格则处在上升趋势中。

布林带在趋势市场中的运用

       一种通常用于区间交易策略的工具也能够用来帮助我们发现趋势走势,这一指标就是布林带指标。

       关于趋势,有一点你需要明白,这就是趋势实际上相当的稀少。这可能和你想象的有明显出入,事实上,价格在70%-80%的时间内都是处在区间波动中。换句话说,这就是价格维持区间波动的标准。

       因此,如果价格偏离了这一“标准”,那么价格一定处在趋势之中。在我们之前所学习的技术工具中,有一种工具能够用来测量这种偏离吗?

       如果你说,是直尺,那么,我们得拿尺子在你手心狠狠敲两下。

       如果你说是布林带,那么,我们将给你网络版的牛奶和饼干!这里有一些,慢慢享用吧。

       布林带是由标准差计算公式计算而来。但是,在这里不要担心自己会成为书呆子,并指出究竟什么是标准差。

       现在,我们将介绍如何利用布林带来确定趋势。准备好了吗?

       我们在这里选择利用1倍标准差的布林线和2倍标准差的布林线。你将看到这些布林线将价格分成三个区域:卖出区域、买入区域,以及中性区域。

       卖出区域介于底部标准差为1和标准差为2的两条布林带之间。市场空头认为,价格必须收于上述两条布林带之间区域,以确定价格处在卖出区域。

       买入区域介于顶部标准差为1和标准差为2的两条布林带之间。和卖出区域类似的,价格必须收于上述两条布林带之间区域,以确定价格处在买入区域。

       介于标准差为1的两条布林带之间区域被称为中性区域,当价格处在该区域时,说明市场正在极力寻找运行方向。如果价格真的处在中性区域,那么价格将收在该区域内部。

       布林带使得我们能够用一种非常直观的方法来确定价格趋势。

       当价格处在卖出区域时,我们能够确定下降趋势的到来。

       当价格处在买入区域时,我们能够确定上升趋势的到来。