[Woodman]

You answered my question with an equities example, I specifically asked about currency. I understand backward looks at charts to see a trend. I want to know why you think you know what drives or trends the currency market, or the bond market (if you want to go for that one).

[groanup]

The same thing drives a trend in the currency markets as drives a trend in the equity markets: people buying and selling. An upward trend, more buyers, a downward trend more sellers. Never confuse a market with economics. There have always been and always will be trends, birds trend toward the South in the Fall, people trend toward a direction very powerfully. Look at the bubble of the late 1990's. It was a powerful trend that made a lot of people very wealthy but it had nothing to do with economic reality.

If you want to know about trends, don't complicate the matter. Find a gauge of some kind, 20 day moving average, 55 day moving average, chart trendlines, etc.

Trend following is the simplest successful investment technique there is. But simplicity is not the same as lack of difficulty. The psychology of trend following is difficult. You'll be buying ridiculously high prices and selling ridiculous low ones, feeling like an idiot at times and losing a lot of money being whipsawed.

BTW, the currencies are some of the best trending markets out there.