What is a Market Cycle?
Cycle
Forex Trading Glossary
Quick Answer: A market cycle moves through accumulation, markup, distribution, and markdown phases, guiding strategy selection.
What is a Market Cycle?
A market cycle describes recurring phases of accumulation, uptrend, distribution, and downtrend. Recognizing cycles helps traders align strategies with the dominant phase.
Cycle Phases
- Accumulation: Smart money builds positions quietly.
- Markup: Price trends higher as demand increases.
- Distribution: Large players scale out near highs.
- Markdown: Price declines as supply overwhelms demand.
Tools for Cycle Analysis
Combine moving averages, volume clues, and sentiment data to determine which phase is in control.
Trading the Cycle
- Align strategy: Use trend-following during markup and markdown, range strategies during accumulation and distribution.
- Scale entries: Accumulate positions when new cycle phases begin.
- Manage expectations: Strategies that worked last phase may fail in the next.
- Stay flexible: Reassess cycle placement after major data releases.
Related Terms
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