The trend trading strategy is one of the most elegant ways to make a profit in the Forex market. You don’t have to think about tons of possibilities when you deal with the major trend. Sadly, amateurs in United Kingdom always find a way to trade the market against the major trend. They want to make big profits by using the super complicated trading method. But complex trading strategies don’t give you a guarantee that you will make a profit. This makes things bad for the naïve traders. Just learn to trade with the major trend and you will see a steady cash flow.
So, how can we master the art of trend trading strategy?
To master the art of trend trading strategy you need to learn a lot. But don’t worry! We will make things easier. We are going to give you some precise guidelines that will help you to find the best possible trades along with the trend. Follow these steps if you want to make a decent profit from this market.
Use of the trend line
The first thing that you should learn is how to find the trend of the market. Finding the trend line is a very simple process but the naïve traders always find a way to make things complicated. Check it out here and see how easily the elite traders at Saxo find the sweet trading spot. To find your trend line, you need to connect three higher lows in the market to find your bullish trend line. On the other hand, you need to connect three lower highs in the market to find the bearish trend line. But there is a small twist while drawing the trend line. The selection of the time frame plays a great role when it comes to a trend line drawing. If you use the lower time frame, chances are high you will not be able to find the best possible trades in favour of the trend. So, try to draw the trend line in the higher time frame since it will give you a better result.
Support and resistance level
The trend line allows traders to find support and resistance level. The elite traders in the Forex trading industry always use the support and resistance level to execute high-quality trades. As a currency trader, you need to think about the conservative trading method. Try to find a bullish price action confirmation signal at the trend line support. When it comes to the bearish trend line, you need to look for the bearish price action confirmation signal. Executing trades at the trend line support and resistance level should be based on the candlestick pattern. Unless you use the price action signals, you might have to lose trades because the major trend often gets changed due to the high impact news.
Analyze the news
Those who trade with the major trend must analyze the major news. Analyzing the major news is by far the most effective way to make a profit from this market. Being a naïve trader think about the long term goals so that you can easily big profit from this market. Forget the fact that you will be trading the market in favour of the trend. To make things easier, let’s give you a simple example. Let’s say you are going to execute a short order in the AUDUSD pair. If for any reason the U.S cut their interest rate the chances are high the market will rally higher. The long term trend might be bearish, but still, the price will go up on such major news. So, never trade the major trend line unless you know the perfect way to assess the fundamental data.
Reducing the risk exposure
The traders often become excited by seeing the success rate of the trend trading strategy. But do you think you can win all the trades by using the trend trading method? The obvious answer is no. So, get ready to lose some trades regularly since it will help you to make a decent profit. Focus on the safety of your capital and try to use a strong risk management plan.