Forex trend following can be very lucrative as for the technical trader forex markets offer some great long term trends and profits for those who trend corollary correctly.
Lets look at the basics of forex trend following.
Forex
Trend following means longer term
Before we start we are going to look at long term trend following and this means catching trends that last for weeks or months.
Were not concerned in day trading here, the odds are against you doing this and short term moves are random so don't try it - you will lose your money.
Spotting the trend
For forex trend following start with the weekly chart this will give you the big picture and you can spot trends that last for weeks months or years here.
Next move to the daily chart and try and spot retain and resistance that is on both charts. The weekly chart gives you the big picture and the daily gives you entry levels.
Methods for trend following
Perhaps the best place to start is with a breakout method.
It's a fact that most major currency moves start from new highs and the advantage of a breakout method is that you can trade with confirmation of a trend in motion.
We have written about breakout methods in other articles naturally look them up, there is not enough room here to clarify in detail.
You can use just charts but we like to use a merge of timing indicators to judge the vigor of the breakout and for this look no supplementary than the stochastic indicator which is the extreme timing indicator in our view.
It's ready free on internet charting services and is easy to understand and apply.
Be very selective
Don't trade just for the sake of trading.
In forex trend following the big moves only come a few times a year so wait for them.
It's these trades that make the big profits, so be patient.
Money management.
A breakout method makes money supervision fairly easy.
Breakouts are whether false and fail quickly, or you get a strong trending move.
When setting stops in long term trend following, don't trail it to speedily to lock in profits.
Your seeing to hold these trades for weeks or even months, so be ready to suffer the emotions of seeing large dips in open equity and keep the bigger picture in mind.
If you are new to trading long term forex trend following is a good way to start.
If you get it right you can make some as a matter of fact big profits and that after all is the aim of all forex traders.
Forex Trend Following - The Basics For development Big Profits