If you’ve every tried to learn currency trading, you’ve come across info on Currency trend trading. I’m sure you’ve heard the common saying, “The trend is your friend”. Without a doubt you’ve probably tried to learn a Forex trend trading strategy or trading system. But the truth is, trend trading can be more difficult than it originally sounds.
The first thing you need to do is be able to identify when a currency is trending. Then you need to have an entry strategy to join the trend at the best price. Obviously, you want to wait for a retracement to get the best price on your entry. But how do you determine if a price move is a pullback or a completer reversal of market direction? As you can see, this can get complicated fast.
I found this video that does a good job distinguishing between pullbacks and market reversals. Watch the video to see how you can determine if a trend will continue in the same direction or change direction.
As you can see, looking back on the charts, it is easy to draw trendlines and spot good entry points from the pullbacks. You can also clearly see the difference between pullbacks and trend reversals. The challenge is doing this in real time under live market conditions.
Another thing you should have noticed from the video is that Forex trend trading depends a lot on the traders interpretation of the charts. This makes trading the trend rely a lot on the individual, and not a cut and dry, systematic strategy. If making decisions about when to enter the market is challenging, trend trading can be extremely difficult.
One way to make things easier is to use a service that identifies and alerts you to trending markets. When a currency pair is trending, you are alerted to the specific time frame of the strong trending pair. Essentially, identifying a trending currency and time frame is taken care of for you, which leads to many more profitable trend trading opportunities.
If you know a market is trending, then you can use what you learned in the video to determine if the pullbacks are retracements or market reversals. If they are retracements only, you can look for entries to join the trend. If you think it is a reversal, you can stay out of the market all together, or look for entries on the reversal.
In short, Currency trend trading can be very profitable, once you know the trending currency pairs and time frames. By using a trend identification service, half the battle is done for you. All is left is to determine you trend trading entry and exit strategy.