August 19, 2017 07:46:07 am EST
By Newsmovesmarketsforex Staff Writer
Forex traders must always stay well-informed about the latest market conditions. Bearish market trends can take over the market suddenly and it is common to see currency prices decline sharply.However, prolonged bearish markets can often be quite depressing for even the most experienced Forex traders.
The key to dealing with bearish conditions is figuring out when the bull market is over. Early anticipation of a bear market can help Forex traders take measures to secure their investments and minimize their losses.
What Does A Bearish Forex Market Represent?
A bear market refers to a rapid drop in currency prices. It is usually caused by depressing macroeconomic data or geopolitical tensions that threaten to destabilize a country’s economy.
While bear markets can be bad news for some investors, especially those who have already invested a significant amount of money in the market, others can make the most of such conditions by buying currencies at cheap rates.
Identifying bearish market downtrends
Technical analysis of Forex Market data is the key to properly recognize bearish markets trends in Forex trading.
Bearish price action is responsible for setting a sequence of lower lows and lower highs. Long-term downtrends can easily be identified by using the data provided by daily, monthly, and weekly charts depicting the trading activities on the Forex market.
The 6-month bearish market trends experienced for the NZD/USD currency pair weekly chart is a good example of long term bearish trends. The currency pair was trading at high price of 0.77650 on March 4,2015 and it dropped to a low of 0.62170 on August 3, 2015.
Effective Ways To Deal With Prolonged Bearish Market Conditions
- Never Let Greed Get The Better Of You
Greed for bigger profits can often land Forex traders in hot water. In order to protect yourself from considerable financial losses, it is necessary to know when to pull out. If you have sufficient data about an impending bear market, don’t let your greed make you hold on longer than you should. Be satisfied with the gains you have and exit the market while the going is still good.
- Monitor Markets Carefully
Just because the current Market mood is bearish doesn’t mean that there won’t be temporary rebounds every now and then. Experienced Forex Market traders always keep an eye out for such rebounds and immediately capitalize on them to keep their losses at a minimum.
- Remain Patient
Traders often find it hard to determine entry points into a bear market because the currency prices often remain in a volatile state that is hard to predict accurately.
The biggest concern amongst traders is that bearish sentiments can sometimes last for weeks, months, or even years. The key is training yourself to positively identify the bearish trending markets and time you entry at the most optimum opportunity. The concept is to properly recognize when the market is trending down through a process of sound technical analysis, establishing and confirming the price action is setting lower lows and lower highs. Once confirmation has been thoroughly establish then the Trader should exercise proper and prudent risk management steps to ensure limiting unwanted exposure and to maximize the potential for maximum gains.
News Moves Markets Forex is a reliable provider of real time Forex news online. We always have the latest foreign currencies rates updates and detailed analyses of the prevailing market conditions. Our website also contains well-researched educational material to help Forex traders make informed trading decision.