Trend Following Strategies: Riding The Forex Market Waves

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A trend-following strategy using breakouts tries to catch up with a new trend as quickly as possible, and ride it until it is confirmed that the trend is about to reverse. Thus, the essence of trend following strategies is always to “stay within the trend”. However, for those of us who missed the initial step, there are still ways available to enter the trade. Trade breakouts or breakdowns, as well as pullbacks, are a great way to achieve this. A simple way to trade the trend One simple and less obscure way to enter the direction of the underlying trend, is to trade the breakouts and breakdowns from resistance and support levels, respectively. I call it less mysterious because it is usually very clear what is a significant low or high on the chart. A trade breakout is possible even if you miss the beginning of a trend. Trading the Breakout or Breakout To do this, you first need to determine the direction of the trend. It should be noted that uptrends form new higher peaks as well as higher bottoms, in contrast to downtrends that form new lower bottoms and decreasing tops. You can use any trading platform to try and identify these characteristics that define uptrends and downtrends. Some people will apply trend lines and moving averages, but I like to keep it simple and just look at the chart to see if the price is heading up or down. Also, trend lines and moving averages are lagging and are not leading indicators. There is an old and simple test for trend. Just ask the child if the price is going down, up, or oscillating. A quick and clear answer will tell you what you need to know, whereas if you need to spend some time figuring out the trend, there is probably no bias. The definition of a downtrend states that a trend will be down if the price is creating lower lows and peaks, however, I always focus more on the highs rather than the lows in a downtrend. In an uptrend, I do the opposite, i.e. focus on the lows and ignore any lower highs until the trend turns around. In the case of uptrends, each higher high (HH) indicates some form of price resistance. Normally this price has to break the resistance level again and again as it moves up. New higher highs are also being formed, which is facilitated by the breach of the previous higher high, which indicates that the uptrend is still intact. In an uptrend, the trader will buy the breakout to a previous important high, and place a stop-loss order at the most recent important swing low, which is also the level that determines the trend, and the level if it is breached will end the uptrend. A level that will affect the majority of traders is more important than a breakout of a level that will affect a few. For more information on this please continue reading but also read: What is a Trend Following Strategy? In a downtrend, traders enter the direction of a downtrend by trading a break of the previous lower low (LL), and thus placing a stop-loss order above the new LH (lower high). The following chart shows how to enter a trade. As we can see from the chart below, a true downtrend will provide many opportunities for short selling. However, the challenge in trend trading is that there will be a quiet period in most financial instruments for most years. One way to solve this problem is to trade more than one asset class, and also trade most of the instruments within each asset class, unless we ignore the non-trend markets. Detail entries in a downtrend Don’t miss a moment! Follow us on Twitter.

Trend Following Strategies: Riding The Forex Market Waves

Trend Following Strategies: Riding The Forex Market Waves

Download our latest quarterly market outlook for our long-term business ideas. Do you enjoy reading our updates? Become a member today and get access to all restricted content. It’s Free to Join As a trader, one of the best ways to stack the odds in your favor is to make trades that go with the trend.

Trend Following Strategy Guide

This is because when you trade with the trend, you are making decisions based on the current direction of the price movement. While this does not guarantee that the price will continue to move in that direction, it does

The other reason is that trends can last for long periods of time. In other markets (i.e. range markets), the price fluctuates quickly and often. A trend can make an extended movement in one direction for a long period of time. This gives traders the opportunity to make much bigger winning trades by setting a smaller stop loss.

The simple answer to this question is yes. Trend trading is one of the most popular ways to trade all different types of markets from forex to stocks.

The reason trend trading is so popular is that once you know how to do it properly, you can find trend trades in many different markets and in all timeframes.

Great Trend Trading System

This allows you to find many different trading opportunities that have the potential to become very profitable trades.

A trend trader is simply a trader who looks for the obvious trend either higher or lower and makes big profits by riding the next wave in the market.

While there are many different trend trading strategies that you can use, in this lesson I will be teaching you a very simple strategy that you can use to find trades in many different markets and timeframes.

Trend Following Strategies: Riding The Forex Market Waves

The most common mistake trend traders make is looking for trends across all markets and timeframes. This is a big tip: price spends much more time moving in range and sideways patterns than it does moving in clear directions.

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If you were looking for trends in every market, you would make trades on the trend when there is no trend. Trends should be easy to spot. You should be able to click on your chart and quickly say “Obviously price is going up or down”.

Since trend trading is so popular and can be used in many different markets, there are many strategies that can be used. However, a lot of these strategies are very complex and don’t actually help you find or take trend trades.

This is also true for trend trading strategies. As we pass below; Once you find a clear direction, you don’t want to overcomplicate things. You just need to find high probability trades and then ride the next wave the price goes up or down.

When you turn to your price action chart, you should quickly be able to see if the price is making a clear move higher or lower. If you’ve been struggling to find a clear move higher or lower, chances are it doesn’t exist.

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Another easy way to find trends and also when new ones start is to look at the highs and lows.

The trend will form a series of swing points. See example chart below. The price is in a downtrend. With this trend we have a series of lower highs and lower lows as well. This is like a stepping ladder with a “lower” price.

An important point: even in the strongest trends, price always makes these swings and spins. These swing and pullback points are often the best times to find high probability trades.

Trend Following Strategies: Riding The Forex Market Waves

There are many different ways to do this, but using swing points and support and resistance levels offers some of the highest probability entries.

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See example below. The price action is first to the upside. When we see this, we start looking for a long position. When the price turns around and swings lower in the support area, then we can look forward to getting a long one. We can go long once the price reaches this support area or we can increase the odds of our trades even more.

One way to increase our odds is to use candlestick patterns to confirm a trade entry. In this example below we found the trend to the upside, the price returned to the support level and then formed a large engulfing bullish bar that would confirm our long entry.

The best way to use a moving average when trading the trend is to use two moving averages and use a crossover. In the example below, two exponential moving averages (EMA’s) are used. The first is the 50-period EMA and the second is the 21-period EMA.

When we see the faster moving 21-period EMA cross above the slower 50-period EMA, we can see the trend change to an uptrend.

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The key with the crossover is looking for widening of the two moving averages. When the moving averages start to widen it shows

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