Forex Trend Following

By: Sacha Tarkovsky

Forex trend following is the way to make money and its catching the major trends that last months or years where the big profits are made.

Here we will look at some specific tools for forex trend following and making bigger profits.

You don't need to buy an e-book or appoint a guru you can learn these tools and apply them easily yourself.

Catching Emerging Trends

The best way to do this is using breakouts from important resistance points.

How do you do this?

Get the weekly chart out and look for important resistance, then move to the daily chart for points that correspond.

Now, you are not going to buy dips as most traders want to do, you are going to buy a clear break of the breakout point.

Buy high sell higher is the key to forex profits

Fact: Most major currency bull moves take place from important market highs and continue quickly WITHOUT a pullback.

You don't anticipate these moves you WAIT for the breakout and go with it.

You will not catch the first bit of the move but that doesn't matter - important breakouts make big profits and if you do this there will be plenty of profits.

Most people can buy breakouts.

Why?

Quite simply, they want to get in at a lower price but "buy low sell high" does not work - Buy high sell higher does, but most investors can't do it - If you can you it you will make money.

Fact is that most traders cannot do this they want to buy without missing part of the move but you must do the exact opposite to succeed.

It sounds easy but mentally it's tough that's why most traders can't do it

How do you know if a breakout won't fail?

You don't, but one tool you can use is the stochastic indicator. We have covered this in our other articles and you can read about it in more detail, but it remains the single best timing momentum indicator you can use and you should use it for confirming a breakout.

Another great tool is the Bollinger band which shows volatility and is a great filter.

To sum up

Trading breakouts is not easy and that's why most investors don't do it, but most investors don't make money.

If you want to catch big trends use a breakout method, examine stochastics and Bollinger bands as filters for your charts signals and you will see how powerful this simple method of trading is.

Foreign Exchange
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