We will identify 2 benefits a simple trend following strategy offers plus an easy way to identify the direction of the trend using forex technical analysis. Talking Points A trend trading plan can be created in 3 simple steps Traders can find a trend and then look to trade a price breakout Managing market exits can be done using previously identified highs and lows It can be extremely difficult for new traders to finalize a trend trading strategy for trading the Forex market. Such events happen very rarely in one single chart.
The main idea of the Trend Finder system
Trend trading is a simple way to cover up some strategy imperfections by identifying the strongest trends in the market. When you trade in the direction of the trend, the rest of your trading approach can fall right into place.
This doesn't mean that all your trades will be winners. It does mean that you don't have to be exact in your entries and exits once you find a strong trend to trade. When you see a strong trend in the market, trade it in the direction of the trend. Notice how each time CCI dipped below , prices responded with a rally. Not all trades will work out this way, but because we were following a strong trend, each dip caused more buyers to come into the market to push prices higher.
Therefore, experienced traders seek out more strong trends to repeatedly take advantage of the m. If you were going fishing and had a choice of ponds to fish in, which pond would you choose? How about the pond with more fish! Identifying strong trends allows us to see which pond is offering more potential fish to catch pips. Assume for a moment, you are the perfect trader that can catch the exact top and bottom of each wave.
More Pips Available in the Direction of the Trend. Now, divide your trades into those with the trend and those against the trend and your chart may look similar to the above.
N otice how more pips are available on the long trades relative to the short trades. This is because this is a strong trend to the upside. By aligning with the direction of the trend, you align your strateg y to the momentum of the market and expose yourself to more opportunities at pips. To determine the trend, pull a price chart on a currency pair of your choice with between candles.
Then answer the question of which direction prices are generally moving? If the trend is up, then confirm the direction by looking for a series of higher highs and higher lows on the chart.
A valid up trend would look similar to the above chart. Eventually, all trends will end. So this uptrend changes to a downtrend when a series of lower highs and lower lows are established as noted below. If the trend is down, confirm the downtrend by looking for a series of lower highs and lower lows on the chart. It scans through all the charts, on all time frames and analyzes every potential breakout. After considering the reliability of the pattern it tells you something like this:.
And you see the chart with the trend lines forming the triangle and the breakout point — all that clearly drawn for you. The trend line looks solid with many touching points, so you are prepared for the massive breakout.
Something you would miss unless you have supernatural powers to watch and analyze all the charts! Such events happen very rarely in one single chart. It's not just drawing trendlines, but it's actually looking for reliable patterns formed by strong trendlines having more than two touching points at a certain distance. Not familiar with chart patterns and these fancy names? After considering the reliability of the pattern it tells you something like this: As more customers will subscribe and more computer resources will be needed, either the price will go up, or we will switch to monthly pricing.