What are the best Forex strategies to be adopted to follow trends? This article will give you an overview of how to design and use a strategy to maximize your chances of making a profit on Forex.
The best Forex strategies to profit from trends
Learn how to manage your account
An essential foundation on which any successful strategy is based is good money management. First of all, you should focus on defending and protecting your assets, especially when using leverage, as even a good Forex strategy can be counterproductive if it is not accompanied by good capital management.
Buying with decreasing trends in Forex
We all know that greed and fear create situations of over-buying and over-selling, and the way to look at long-term trends is to look at the main moving averages. For this purpose, the 20-day moving average, like the Bollinger Moving Average, are good indicators that will show you when the price will return to its long-term trend levels.
The group to pay special attention to is companies, as they are motivated mainly by hedging positions and not by speculation or greed and fear. In this case, if you see them taking positions against small and large speculators, you will often see a change in the direction of the market. In addition, it is an easy to use tool and it is free.
Before time is not the time, after time is not the time
When you detect the potential configuration of a trade, you should always check that the price dynamics take your signal into account before placing your order. There are two good indicators for this: the RSI and the stochastic. Both are visual indicators and it should not take more than an hour or two to master them. By using them, you increase your chances of profit, so it should be part of your technical learning history.
Taking a position with price breaks in the Forex market
This is an excellent way to spot trading signals and works based on the simple fact that the long-term trend in the market starts from breaks in support or resistance levels and continues with that momentum. When you depend on breaks you don’t have to worry about predicting, waiting, guessing or praying, all you have to do is simply negotiate when there is a price break and it is precisely because you take a position on the reality of the price movement that you put all the odds on your side and that is the key to success.
Some tips for good money management
Control your leveraged positions – this is the main reason for closing accounts.
Always remember to set your firing limits and do so as soon as you get into a position to reduce the temptation to let your losses run wild.
In terms of risk, all trades are equal and never make the mistake of calculating your risk reward by the equation: OBJECTIVE – YOUR TRADING LIMIT, as this implies an assumption in your calculation. Always think first about the worst case scenario, and if things get better, ok.
When setting trigger limits, make sure you understand the implications of price standard deviation and price volatility. Then place your trigger limit outside of random volatility. The notion of volatility is an essential element and, therefore, must be fully understood.
Don’t set your trigger limits too quickly or too close to your entry price. You will have to take into account the temporary drop in inventories if you want to make significant gains. Most Forex traders are so interested in limiting their risk that they place them too close and do not take long-term trends into account. You need to accept that the price will drop in the short term to make big profits in the long run.
Don’t look at your trades individually, but instead manage all your positions as an entity and make sure to adjust your risk management in terms of your overall account.
The road to success in Forex
Simplicity is the basis of any successful Forex strategy. Do not overload your system with a multitude of indicators. Simple strategies are more stable and robust and you are less likely to break. Always keep in mind that, in the long run, money management is the cornerstone of your success.
Once you have your trading strategy in place, you will need confidence, discipline and courage. Confidence and discipline to deal with periods of loss and keep them under control and courage to keep an eye on long-term trends.
If you already have a forex trading system and follow all the tips listed above, success may soon be knocking on your door. Remember, by following the big trends, big profits will come naturally. And all of this in one of the busiest environments in the world – the money market (Forex) … And it can be done in about 30 minutes a day.