Trade Forex Trading

Learn Forex Trend Following Strategies - Trend Following

A trader must create a trading strategy that they stick to when trading the trading market. A trader must have the discipline to stick to the trading system at all times. That's why it is better to come up with trading strategies which are simple - profitable systems will be a lot easier to follow & stick to. This is because one knows that by following the rules of their system they'll be successful.

A carefully designed trading strategy which has been back tested and proven to produce profitable results is one of the keys to becoming successful when trading the trading market. This type of trading strategy will make it easier for trader to follow the rules of their trade strategy because they already know that the trading strategy is profitable, henceforth keeping up the discipline required to continue following the trading system will be much easier.

Successful strategies will also include:

1.Money management guidelines

2.Forex Psychology Mindset

These two will greatly improve the success of any tradingtrade system.

However, Let us look at price action strategy before expounding more on forex money management & forex psychology.

Trend Following Trading Strategies

Trend following strategies are depending on first of all determining the overall market trend, whether the market is moving upward or it's heading downwards. After determining the market trend the trader will then only open trade positions in one direction.

Upward trend - in an upwards trend prices keep heading up, & here the trader will keep opening buy trades.

Downward trend - in a downwards trend prices keep moving down, & here the trader will keep opening sell trades.

The different strategies of determining the market trends and the two most popular ones are:

Trendlines - traders will draw trend-line on the market price chart to determine the current general market movement. Once the market trend direction is determine a fx trader will then open trades once the price touches the trendline or when the price is close to the trend line. The trader will only open trades in direction of the trend.

When markets form trends, the market trend will have a lot of momentum & this momentum will mean that the market prices will keep moving in that particular direction for a period of time that lasts for quite a while.

Trading the trend is one of the most lucrative way to trade the forex market if a trader catches a trend that has already formed they can make a lot profit just by trading in direction of the trend and the longer the trend stays the longer a fx trader can continue to earn profits. Some major trend might last for years & these can prove to be the most lucrative trading setups especially when they last for years.

MAs Strategies - Another trend identification strategy is the use of the 20 day MA, and when prices are above this moving average the market is bullish and if prices are below this MA the market is bearish.

The 50 day moving average also is used for determining the medium term trend, while the 200 day moving average is used to determine the long-term trend of the market.

Traders also can use two moving averages to form the moving average cross over trading method, this technique will have a shorter period moving average & a longer-term moving average MA and these two will be use to determine the ruling market trend. For example a trader can use the 5 day and 7 day MAs, & for this strategy the trend is upward if both these moving averages are heading in the upwards direction & the trend will de down if both these two moving averages are moving downwards.

This system will indicate the trend is about to change one these 2 line crossover each other. This signal will be a god time to close trades if a fx trader has open trades.

Forex Strategies Tips

Once a trader has come up with their trading strategy, they should also include the following so that to make their trading strategy more successful.

1.Equity Management Rules

2.Forex Psychology

Capital Management Rules

Money management rules should be part of your strategy - the trading rules will help you as a trader to manage risk. This means that you'll use two rules of forex money management - these are risk : reward ratio & drawdown reducing method when placing your trades to determine the lot size that you'll open in the market. The most popular funds management rule use in forex & the one that you should also add to your plan is the rule which says a forex trader should never risk more than 2% of their account balance on any one single trade.

To learn more about these two forex money management rules, traders should read the money management guide that's on the learn forex courses section of this site under the forex key concepts lessons.

Forex Psychology Mindset

In order for one to become successful when trading the forex market one has to learn about forex psychology. The forex psychology or mindset that's required to become successful in forex is one that avoids the emotions of fear and greed while trading the market & is a mindset of total discipline that one will follow all their rules & their strategy and only trade with signals that are generated by their forex strategy. With discipline one won't trade unless their strategy gives a trade signal. A trader will have the mindset of only following their system 100 % all the time without second guessing the trading system. A disciplined trader will also not place trade transactions in market just because the currency market has started to move up-wards or downwards, instead a forex trader will wait for a trading signal to trade to be generated by their trade strategy.

In order to study more about forex psychology and how to manage emotions while trading the online forex market one can read the forex psychology tutorials from the learn forex courses section of this site under the forex key concepts tutorials.

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