Trend-following trading strategies, indicators, and templates

Trend trading is one of the most common and safest methods in Forex; there is nothing simpler than entering into a trade in the direction of the prevailing trend and waiting for the profit to reach the planned level.

But everything is simple only at first glance, because the trend does not move in a straight line, and it is quite difficult to choose the direction of the transaction.

In addition, it is necessary to take into account a lot of other indicators that characterize this trend, the main one being the strength of the existing trend, how long it can last and what caused this movement.

It is also important to remember that for any time period there is a direction, which can also be a rollback for a longer time frame.

We will discuss the specific features of trend trading in this article.

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First of all, I'd like to emphasize why it's unwise to trade against the trend. The main reason such trades become unprofitable is when the correction ends and the price reverses in the direction of the underlying trend.

Traders don't always enter the market at the very beginning of a pullback and don't always correctly assess the size of the resulting correction. Therefore, to ensure the safety of your trades, it's advisable to trade only with the trend.

Trend direction.

This indicator should be considered only by analyzing the direction of price movement on several adjacent time frames at once; only in this case can errors be avoided.

Forex trend trading

For example, let's take the time intervals of M15 and M30. On M15 there is a downward trend, and on M30 an upward trend. In this case, it is highly likely that on the 15-minute time frame there is a price correction in relation to M30 and it is advisable to refrain from opening a trade.

The optimal option for entering the market when trading with a trend is if there is an upward trend on M5, M15, and M30. In this case, we can safely open a buy transaction.

However, there are always exceptions to every rule. A reversal in price over a shorter timeframe can also signal the beginning of a reversal. Therefore, to avoid mistakes, it's best to use technical Forex tools, such as trend indicators.

In practice, trend trading allows you to achieve the greatest profit from long-term trades, as you take advantage of the maximum price movement range. However, before opening an order, you should always analyze the market and forecast its future behavior, taking into account fundamental and internal factors.

Using fundamental analysis

To trade effectively on the stock exchange following an existing trend, it's helpful to know the origins of the current trend and what caused it. Consider the so-called fundamental factors that caused a reversal or strengthening of the existing trend.

For this reason, it will be easier not to search for the desired event in the news history, but to trade according to the trend after new news has been released.

You can also use an economic calendar for work; it often contains a forecast of an expected event; this factor also influences the market and can be used in work.

At the same time, news against your existing position will be a signal to close it, as it may change the trend.

Indicators for trend trading

In order to correctly determine which direction the trend is moving and react promptly to changes in the direction of this movement, you should use trend indicators:

These tools will make your trend-following trading easier and more profitable. It's best to use two scripts at a time, as this will allow you to more accurately assess the market situation.

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