Forex Trends: Make Big Profits From Them

By: Kelly Price

Forex trends occur all the time and a glance at any forex chart will show you them but making money from them is far harder, as you have to employ correct market timing and risk control. Here we are going to show you how to forex trend follow the right way for big gains.

What time Period?

Here we are going to look at the big trends and these typically last for months and some last for years, as they reflect the health of the underlying economy.

Lets look at how to enter existing trends and execute trading signals correctly.

Bu far the best way of doing this is to but or sell breakouts, to new highs or lows and dips to value areas.

Buy New Highs!

Most major trends start from new market highs not market lows.

When a price breaks out you go with it. It may not appear that you are getting the best entry point however you are trading with the odds in your favour and valid breakouts tend to give big price moves.

Many traders make the mistake of not doing this and waiting for a "better price" to occur on a dip - but breakouts tend to accelerate away, never dip back and the entry and big profit is missed.

The more times the resistance has been tested and the wider these tests are the more valid it tends to be and 3 tests is a minimum.

Buying Value Areas

If a breakout does not occur, you can wait for a dip to occur and in longer term trends you always have them, as prices become over bought or oversold and then come back to longer term value.

Here you can use a simple moving average supported by momentum to confirm the move.

In currency trading we love dips to the 20 and 40 day moving average to initiate new positions. You simply wait for the dip and use momentum indicators to show that momentum is turning in the direction of your view - then enter.

NEVER try and predict in advance - act on the reality of the change in momentum and you will have the odds in your favour. Try and predict and you are really just hoping and guessing and will lose.

Forex Trend following involves patience and making sure that you are getting in at the best price in terms of the risk reward.

The above two tips will help you do this.

Many traders like to catch or predict where highs and lows will be and be perfect - but you cant do this so don't try. If you could catch just 50% of all major trends you would be very rich and this is the aim of forex trend following.

Look at a chart and practice using breakouts and buying to 20 and 40 day MA and you will surprised at how effective and profitable these simple tools are; in turning forex trends into big profits.

Foreign Exchange
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