Forex markets trend and if you look at a forex chart the big trends last for weeks or months and it’s these trends you need to lock into to make big profits. Forget, short term moves forex trend following means longer term and bigger profits.
If you want to forex trend follow and make a lot of money with low risk, use the tips below in your forex trading strategy and you could soon be making triple digit gains.
First – you need patience the high odds breaks were looking for don’t come around every day, you will get probably 5 – 6 big high odds trades per currency each year.
You need to wait for them.
Don’t worry, I know traders who make triple digit gains trading just a few times a year. Remember – you are judged on the accuracy of your trading signal and market timing, nothing else and to be accurate you need to wait.
Second – Buy breakouts.
It’s a proven fact that most big trends start from new market highs or lows and while it may appear, you have missed a bit of the move, the odds favor a continuation.
You need breakouts though that are valid and not all breakouts are the same in terms of the odds.
The best breakouts, feature several tests in several different time frames and the wider they are spaced apart the better. Generally, the more uncomfortable you feel and the more people who disagree with your trading signal the better – remember only a small minority win.
Most traders hate breakouts, they want to wait for a pullback ( which never comes) to get in at a better price – grit your teeth the odds are in your favor!
You should also use some momentum oscillators to confirm the move. We don’t have time to discuss them here ( look up our other articles ) but they will tell you price velocity is moving in your favor and increase the odds of success.
NEVER – Buy or sell a breakout which is NOT supported by momentum.
Once the breakout occurs, your stop is easy – right below the breakout point.
The real key to forex trend following and milking the trends for all there worth is the way you move your stop. Most traders trail to quickly and get bumped out.
They then see the trend go back the way they though piling up thousands of dollars!
Don’t let this happen to you. WAIT.
You want the trend well underway, before trailing your stop and you want to keep it behind random volatility ( if you don’t know what standard deviation of price is make it an essential part of your forex trading education).
Accept that to hold the longer term trends, you are going to have to take short term price swings against you which eat into your open equity in the short term.
Don’t worry to much about this.
You are after the bigger price at the end of the trade. Once a trend is in motion, we like to trail stops behind the 40 day ma. Sure, we give a bit back at the end but you don’t know when a trend is over, or how long it will last, so there is no point in predicting.
Keep in mind, if you caught just 50% of every major trend, you would be very rich.
Does the above sound simple?
It is in terms of theory – but you must be disciplined in the execution and holding of your trades. No second guessing what the market may, or may not do!
Trend following forex, with a simple robust forex trading system based upon breakouts, will make money and will continue to make money and can help anyone achieve currency trading success.
