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tmbaru

FOREX Trend Following

By tmbaru, in Tech Analysis

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tmbaru    10

tmbaru
Posted

Most trading strategies in the Forex Market can be categorized into categories; Mean Reverting and Trend Following. In this article, we are going to look into details; Trend Following.

Forex trend following is mostly used by professional traders. Amateurs Forex traders and retail traders tend to avoid trading using this method. Analysts have it that most successful Forex traders in the world use this method of trading in their dealings. All you need to do as a trader is to devise a long term trend following formidable strategy which you can use to trade in currencies few hours a day to build long lasting wealth. You have to master the art of trend following currencies to reap huge benefits from the financial market using this method.

Forex Trend Following Definition

Trend following is basically a method of Forex trading that follows up or down trends in a currency pair which h can last for a week or extend for 52 weeks (1 Year). Using this method, a trader aims to get approximately 70% of the trends to make huge margins. Traders usually do not trade frequently but once in a while but makes huge profits from their trades. Forex trend following is one of the most profitable way in currencies trading.

Does Trend Following Work?

This is a question that usually boggles the minds of many traders especially newbies and retailer traders. The answer is yes, it does. Take time and analyze currency pair for a period of time and you will see a trend that lasts for a long period of time. These trends usually reflect economic cycles in the various countries the currencies represent.

How to Devise a Trading Strategy on Your Own

If you are planning to trade long term in the Forex market, then it is of paramount importance that you devise a formidable strategy that you can employ in the long run. Here are ways you can do that perfectly well:

 Utilize weekly and monthly charts to see trends which might be hard to see from a daily chart

 Use various momentum indicators (2 to 3 will do) to confirm your trading signals

 Employ daily charts to time your trading signals

 Enter the trade on breakouts from ranges to new price highs and lows. It is of utmost importance to enter a trade as the trend matures.

 Set a stop loss on entry and stick to it.

Follow these guidelines and you will generate huge profits from currency market in the long run. You will be in a position to execute a deal within an hour and get handsome margins from it.

Why Trend Following is a Daunting Task for Most Traders

Trend following is the most profitable method in Forex trading yet the toughest. Nothing comes on a silver platter and this applies even in currency trading. Before you get to that level of making huge profits from a single trade, you have to exercise patience and be committed to the course. You have to be disciplined and patient to enter the trade only when the trend matures but the truth of the matter is that most traders do not have these attributes. Most Forex traders get so excited when they start making profits and eventually throw their discipline in trading to the winds. This detrimental because a trader does not take ample time to analyze how the market is performing before venturing in the next trade. They just want to trade non-stop and before they realize all the huge profits they have made will be eroded and they start making losses. The worst a Forex trader can do is to submit to his emotions. As a trader you have to instill ice-cold discipline in your ventures if you want to enjoy loads of wealth in the long run.

Conclusion

Forex trend following will help you get great rewards in currencies trading but you have to exercise discipline and patience in your trading. You have to also master the art of ignoring short term pull backs in equity against you. This method of trading has been used by the best traders across the globe who have made millions of dollars in trading in currencies. If others are making it big using this strategy, you can also make it ;)

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