Market Types

The market often display's some very familiar patterns of price movement. Once a pattern is established, it becomes the most probable course of future price action until the market changes. There are two types of markets which become important for the beginning trader to identify; trending and trend-less. Each market type has two specific patterns which you will also notice over time.

These market types and patterns can be defined as follows:

Trending - Steady elongated price movements with less than a 45-degree angle with occasional pauses, profit taking, or resting periods.

Profit Potential in both Rising and Falling Markets

Profit Potential in both Rising and Falling Markets

In every open FX position, an investor is long in one currency and shorts the other. A short position is one in which the trader sells a currency in anticipation that it will depreciate. This means that potential exists in a rising as well as a falling market. The ability to sell currencies without any limitations is another distinct advantage over equity trading. In the US equity markets, it is much more difficult to establish a short position due to the Zero Uptick rule, which prevents investors from shorting a stock unless the immediately preceding trade was equal to or lower than the price of the short sale.