The market has two states: consolidation and trend. In the first case, there is no specific price movement on the exchange. No significant actions take place at this time, immobility reigns in the market. The second state is characterized by a movement with a certain direction.
Many analysts agree that the financial markets (not only Forex) most of the time of their work are in a consolidation state. Tendencies remain a very small time period during which the development of the price movement occurs. It is this time that professionals recommend currency trading participants to enter into transactions. Such trend trading involves capital and risk management.
A pronounced trend can be identified on any chart. An analysis of the place where it can be traced indicates a recoilless and smooth development of the market situation. From this it follows that it is advisable to start trading with a small stop loss, since the direction of the price movement is determined by the trends quite clearly.
During consolidation, experienced traders trading in the medium term practically do not work. The reason lies in quite high risks, since currency fluctuations in this market condition have very little activity. Because of this, it is difficult to obtain substantial income from the transaction, although losses in this case, as a rule, do not pose any particular danger. Short-term enthusiasts, on the other hand, are obliged to conclude a large number of operations, which requires them to be diligent and attentive, since the success of such trading depends on a constant analysis of the market situation. Also, they should not forget about the costs associated with the spreads and the payment of fees.