If you have ever though about trading Forex, you’ve come across information on Forex trend trading. I’m sure you’ve heard the common saying, “The trend is your friend”. Without a doubt you’ve tried to learn a Forex trend trading technique or system. But the truth is, trend trading is not as easy as you might have been led to believe.
You must first be able to identify a trending market and time frame. Then you need to figure out when the best time is to join a trend. Obviously, that would be on a pullback. But how do you know if a price move is a retracement 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 or completely 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. If is also simple to spot the difference between retracements and complete market reversals. The challenge is doing this in real time under live market conditions.
An important aspect touched upon in the video is how Forex trend trading depends a lot on the traders interpretation of the charts. This makes trading the trend dependent on the skills of the trader, 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.
Luckily for us, there is a service that makes identifying trending Forex markets very simple. When a currency pair is trending, you are alerted to the specific time frame of the strong trending pair. Basically, identifying strong trends is taken care of for you, which is half the battle.
If you know a currency is trending, then you can apply what you learned in the video to distinguish between retracements and reversals. If they are retracements only, you can enter the market when the price action resumes in the current trend direction. If you think it is a reversal, you can avoid entering the market, or look for entries on the reversal.
In short, Forex trend trading can be very accurate, once you know the trending currency pairs and time frames. By using a service that alerts you to trending markets and time frames, half the battle is done for you. All is left is to determine your trend trading entry and exit strategy.