Types Of E-Currency Trading Markets

There are generally three main types of e-currency markets in currency trading. These are trending, directionless and volatile and each e-forex market have its own distinct characteristics. The three market types are derived from the distinct chart patterns which appear when there is a shift in market action. Have a look at the following and know more about different types of e-currency market patterns.

Trending E-Currency Trading Markets

Trending e-currency trading markets are associated with strong price trends. Whenever there is a strong trend in the e-currency trading markets, the technical analysts have to make number of adaptations order to make allowances for changes in the way indicators and technical tools work. Sustained large increase or decrease in price characterizes a trending market. One of the technical tools which are used in trending e-currency market types is the Stochastic Oscillator which range from over bought to oversold territory will not provide much evidence of a trending market. Trending e-forex markets are believed to be the easiest markets to trade among the three types of e-currency market.

Directionless E-Currency Trading Markets

The directionless e-currency market types are characterized by smaller, insignificant up and down movements in price, with the general sideways movements. These kind of e-forex markets require the use of naked calls and puts, verticals and range bound trading. The Stochastic Indicator is commonly used tool in the directionless markets.

Volatile E-Currency Trading Markets

The volatile e-currency trading markets show sharp jumps in price. These markets exhibit a market action which results in a quick and unexpected change in volatility.

Volatility expansion strategies profit from market actions. Basically, the strategy measures recent volatility and attempts to trade an immediate increase by buying an upside breakout with increased volatility or selling a downside breakout as the volatility increases. Another measure of volatility in e-forex markets is the difference or spread between two moving averages—the spread increases with volatility. Price action, such as gap openings or an increase in the daily range, can also be considered an indication of an increase in volatility.

The above stated e-currency trading markets can be traded with the help of trading strategies. The e-currency trading strategies teach how to identify, enter, manage and then exit a trade.