Trade Forex Trading

Learn FX Trend Following Strategies - Trend Following

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

Having a trading strategy that is well-planned, tested, and known to give good trading results is key to succeeding in the market. With this kind of strategy, it will be easier for a trader to stick to the rules because they already know it can make money. Because of this, it will be much easier to stay disciplined and keep using the trading system.

Successful strategies will also include:

1.Money management guidelines

2.Forex Psychology Mindset

These 2 will improve greatly the success of any trading strategy.

However, let's first examine price action strategies before expanding further upon guidelines/rules for Forex money management and the psychology of Forex trading.

Trend Following Strategies

Trend strategies start by spotting the main market direction, up or down. Traders then enter positions only in that direction.

In an upward trend, prices continue to rise, leading the trader to consistently open buy positions.

Downward trend definition: In a period where prices consistently decline, the appropriate action for the trader is to continuously establish sell trade positions.

The different strategies of determining the market trends & the 2 most popular ones are:

Trendlines - traders will draw trend-lines on the price chart to understand the current general market movement. Once the price trend direction is understood, a forex trader will then start trades when the price touches or gets close to the trend-line. The trader will only start trades that follow the direction of the trend.

When markets establish trends, the resulting price movement possesses significant momentum: this force typically causes market prices to carry on moving in that particular direction for a considerable span of time.

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 & the longer the trend stays the longer a fx trader can continue to earn profits. Some major trend may last for years and these can prove to be the most profitable trading setups especially when they last for years.

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

The 50 day moving average MA also helps find the medium term trend, and the 200 day moving average MA helps find the market's long term trend.

Traders can apply two moving averages to build the moving average crossover strategy. This setup includes a short-term MA and a long-term MA. These two help spot the main market trend. A trader might choose the 5-day and 7-day MAs as an example. The trend rises when both MAs point upward. The trend drops when both head downward.

This strategy will indicate the trend is about to return once these 2 lines crossover each other. This signal will be a good time to close trade positions if a fx trader has open trades.

FX 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 Strategies

2.Forex Psychology

Capital Management Guidelines

Put money management rules in your forex strategy. They let traders handle risk. Use two forex rules: risk-reward ratio and drawdown reduction. Set trades with them to decide lot sizes. The key funds rule for forex, which fits your plan, says never risk over 2% of account balance on one trade.

To enhance understanding of these two fundamental forex money management principles, traders are advised to consult the dedicated money management guide located within the 'Forex Key Concepts' lessons section of the educational courses offered on this site.

FX Psychology Mindset

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

To learn forex psychology and emotion control in online trading, check the tutorials. Find them in the learn forex section under key concepts.

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