When we hear about successful traders, we generally tend to think of hidden, secret strategies, years of experience or a $450 EA managing the account. While there are many lucrative strategies that aren't well known among the trading community and many managed accounts which can trade automatically for you, there's a much more simple, yet equally effective, method of succeeding in Forex. This simple method is trend following.
Currencies exhibit trends due to market movements & fluctuations. These trends are generally easy to follow once you've learned what to look for. So many traders miss out on tens of thousands of dollars because they don't follow the trend correctly or sell off way too quickly, only gaining $200 in profit when they could've just as easily made $2,000!
Put simply, trend following can be defined as following the current market trend so that you can predict where the value of a currency pair is going to go, allowing you to buy/sell at exactly the right point in order to maximize profit from a single trade.
Along with spending some time watching charts & real time trends in order to gain experience, you can use trend following techniques to your advantage by following these simple steps:
1.) Look at where the market is currently moving, then trade based on the breaks of important market highs & lows.
2.) Set a realistic Stop Loss Rate in case the market moves against you.
3.) Follow the trend to it's maximum potential using wide spreads in order to make the most money.
Remember, you want to make the most money possible, so accepting profit draw downs on a long term trend is key, these draw downs are normal when following a long trend. The most important & most profitable trends can make you the most money, so be sure to target them.
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