Trend Trading Forex Strategy: Skills, Tips, Examples

Trend Trading Forex Strategy: Skills, Tips, Examples

Trend Trading Forex Strategy: Skills, Tips, Examples

The vast majority of profitable Forex trading strategies are built on the trend. If you decide to build a career as a successful Forex trader, first of all, you will need to train with your broker. And in the first trading lesson, the teacher will definitely tell you that trading against the trend is the right way to lose your deposit.

 

The concept of “trend” can be called the cornerstone of all technical analysis. It is not surprising that many popular strategies, algorithms, indicators are built on the study of the properties of market trends, and trend trading forex strategy is among them. We will primarily consider deals on binary options, but in general this applies to any instruments.

 

What is a trend and how to determine it correctly?

 

A trusted broker provides its traders with a variety of Forex trading tools: currency pairs, options, precious metals, CFDs and even cryptocurrencies. Whatever you trade, the trend is called the main, pronounced trend of price movement. At each timeframe, the price movement chart shows its trend. For beginner traders, it is better to focus on the long-term trend formed on the monthly, weekly and daily charts (MN, W1 and D1).

 

The four-hour (H4) and hour (H1) charts show the formation of short-term trends, which can also be used for profitable operations.

 

Displaying charts at younger timeframes is a market noise. There is a forex trend trading strategy that allow you to make money on a fifteen-minute chart, or on a "five-minute". However, such strategies are quite complex, require the trader considerable experience and are risky for a beginner on Forex.

 

However, some simple rules can be used by a novice trader to work out their skills in trending and demoing.

 

Exponential Variable Mean or EMA. If the price chart for a four-hour timeframe (H4) is below the indicator, then the market is in the power of the bears, and purchase agreements will be undesirable. If the chart has jumped up and fluctuates above the indicator line, then the bulls have taken over the market and there is no need to hurry to sell.

 

Use the Stochastic Oscillator. The Stochastic Oscillator indicator will help determine the entry point to the market, according to trend trading forex strategy.

 

Just in case, insure yourself a simple calculation of the turning point of the market. Alternatively, you can use the candles of the previous day, add up the value of the trading instrument at the time of opening and closing the market, as well as the minimum and maximum prices. The resulting value should be divided into "4". If the current price is lower than the received value, it is better to postpone the purchase agreements. If the value is higher, refrain from selling.

 

The schedule will tell everything. Estimate the schedule visually: the purchase agreement will be appropriate when the bear candles are short and the bull ones are long. Conversely, make deals for sale when bear candles are long and bull's candles are short due to trend following forex trading strategy.

 

The market is moving in waves. After each growth, the market rolls downwards and vice versa. It is useful to analyze the highs and lows of the price chart. If each new high of the daily chart price (D1) is higher than the previous one, the bull trend prevails in the market. If the new high is lower than the previous one, the market has been captured by bears and the downward trend prevails.

 

Build a price movement channel. The principle is the same as with the trend lines discussed above. In the MT4 terminal you can build a price movement channel.

 

When using the price channel, it is important to remember one simple rule: if even a correction has started in the market but your agreement is on a trend, then you are still very likely to receive your profit.

Examples of Trend Trading Forex Strategy

 

There are a lot of trending strategies. Basically, they are all designed to enter the market in touch. For example, if we take the strategy on moving averages, you will need to enter the position at the moment the price touches the indicator. I like the strategy based on trend lines more and consider the forex trend trading strategy called Third Touch to be the best.

 

Early Entry trend following forex trading strategy.

A pattern for entering the market appears at the very beginning of an emerging trend, thereby increasing the potential of the transaction. I like the early entrances, because it not only increases profit, but also significantly reduces loss.

 

To implement the entrance to the purchase according to the strategy, it is required:

1.The presence of a downtrend.

2.Breaking through the last local maximum.

3.Minimum should no longer be updated.

4.After breaking through a new high, draw a trend line.

5.We are waiting for the price of the third touch to the trend line.

 

Forex trend trading strategy of Adding.

There are cases when you are either late with entry at the best price or just want to add to an existing position. It should be warned that this method is intended for more experienced traders who are able to compare information from different timeframes and not get confused in it.

 

After the opening of the main position for the working TF, you should switch to the TF of the younger period and if there are similar conditions for entering into the transaction according to the Third Touch strategy, add volume.

Comments (0)

    Top