Trend trading strategies came to be one of the most acclaimed set of strategy that endeavors to determine a trend by following and reviewing market momentum using technical indicators. Forex trend trading strategies are conservative in nature that it gives increased opportunity to trade with so little risks and can cater to different types of traders, specifically to traders who utilize confirmation.
Trend trading strategies are wired to determine trends and to exit positions prior to market reversal. Opening price, closing price, and trading range of every candle are of great importance as they offer abundant information critical to market’s movement. There are three trends in trading board- the uptrend, downtrend, and sideway trend.
TYPES OF TREND TRADING STRATEGIES
With high level of risks in forex market, traders often face setbacks. Such is brought by inadequate knowledge in identifying reversal. But with the help of trend trading strategies’ technical indicators, identifying these trends become efficient as traders only have to look for these signals to determine a trend.
I-MAIN TRENDLINE ADJUSTING
High level of volatility makes the market ambiguous and random thus making the market condition hard to analyze. With this, a trendline is crucial as it traces the price direction giving traders a clearer view of the persistent trend movement. After drawing a trendline, trend is more visible.
II-USING CHANNEL
The use of channel is imperative as it projects comprehensive view of the trend. However, it is only very seldom that a perfect channel appears as the market is complex to the point that support and resistance are oftentimes get broken. Its purpose is to give hints on where to strategically place long and short positions.
III- USING MOVING AVERAGES
This technical analysis tool is accurate enough to bring out current market condition. This tool involves the moving average 200, and the moving average 50 with the former considered as the mother of all moving averages.
This does not forbid traders to place period above 200 level but increased number of points leads to flat-lined averages increasing its chances to become horizontal completely diminishing its value. This is the reason why moving average 200 is highly regarded.
IV- USING OSCILLATORS
This tool was designed by Tom Demark for MT4 and MT5 functions and was created to boost profitability in trade by revealing overbought and oversold conditions. This allows traders to identify reversals before it even occur.
V- USING MOVING AVERAGE CONVERGENCE DIVERGENCE
Moving average convergence divergence is a hybrid of trend indicator and oscillator. Utilizing this tool will result to a more precise, and optimum trend following. This observes the zero level and when will the price cross the point.
CONCLUSION
Trend following trading strategies differ according to traders’ preference, trading method, and personality. Regardless, these methods are the most efficient structure because of its simplicity and innate ability to fit with different timeframes. Relevant to this, trend trading strategies pdf are available online for traders to read in order for them to determine which among the five most common trend trading strategies are they going to utilize.