Forex Trend Following - Big Trends for Bigger Profits!

By: Kelly Price

If you want to make the really big money in forex trading then you need to catch and hold the longer term trends - here are two tips that will give you the ability not only to catch the big trends but also enter them with the best risk to reward...

Use Breakouts

This is simply the best way to catch the big trends.

All you do is look for support or resistance that's been tested more than twice and if the time frames are wide apart - even better. The more tests and the more different time frames, the more valid support and resistance is likely to be.

All you do is wait for the break and buy or sell accordingly.

Most traders hate buying breakouts, they want prices to come back so they can get in at a better price but of course they don't get in the market, the trend sails over the horizon and the trader who waits never gets in.

Breakouts are simple, effective and it can be very profitable.

The key is to focus on the really valid levels which have been tested numerous times and investors feel are significant.

There is no simpler or better way to get in on the big trends than to trade breakouts.

Getting In on The Trend Once its in Motion

What about if you miss the first entry level what is the best method to enter a trade?

Use Bollinger Bands

I personally don't think Bollinger bands are the best tool to catch new trends (although many people do) but there an excellent tool for getting in on a trend once its in motion.

In strong trends prices will be volatile and be at the outer or inner bands - but they will dip back to the centre moving average and this is where you buy.

This works because its human psychology greed and fear push prices to far and then they fall back to fair value which is the moving average.

The middle band is a great place to buy or sell. Stops should then be behind the outer band.

Nice and simple, as trading should be.

Timing Your Trading Signal

On both the above methods you need to make sure you get the odds on your side, you need to check momentum before you enter the market.

You need to use some momentum oscillators to get make sure you have price velocity on your side.

There are many to choose from and there discussed in our other articles - but we love the stochastic.

We simply use bullish or bearish divergence to trade moves and that it.

There are many other momentum indicators but the stochastic is simply the best tool to timing market entry.

So if you want to catch big trends then make sure you learn to use breakout methodology and Bollinger Bands and finally, time your entry with momentum.

If you do the above your forex trend following could become very profitable and you can enjoy long term currency trading success.

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