Forex Trend Following - Doing it the Right Way for Success

By: Monica Hendrix
If you want to make money forex trading, you need to learn the art of trend following. This article will tell you the best type of trends for you to follow - in light of your trading personality and the profit potential of each method.

There are effectively three common types of trend following:

Forex day trading, swing trading and long term trend following lets look at all three

Forex Day Trading

The most popular and simply a guaranteed way to lose money - all short term volatility is random making support and resistance meaningless.

Its sounds good in theory and it makes a good story for vendors.

They sell systems that are based on worthless, hypothetical simulations which have never been traded. They don't have a real track record and the reason is day trading simply doesn't work.

I find it baffling that intelligent people try it and think they can in a few hours tell what a huge mass of millions of traders will do - Avoid or lose!

Forex Long Term Trend Following

The long term trends last for months or years as they reflect the economic health of the country and they are extremely lucrative if you have the patience and discipline to follow them.



The problem is many traders find it hard to follow a long term trend when volatility can eat into open profit sometimes by thousands a day. It's rewarding, but its tough, even for experienced traders - but if you have the mental discipline and patience to do it, it's the most lucrative form of forex trend following.

Forex Swing Trading

This is taking smaller movements with the major trends.

You are aiming to take advantage of moves that can last for a few days to a week or two. This method is perhaps the easiest for novice traders.

It's simple, there is plenty going on and you are right or wrong quickly which means that it's not so mentally demanding.

Of the three methods I would say that novice traders should cut their teeth on swing trading and progress to longer term trend following later if they wish.

If you are long term trend following or your forex swing trading you can learn a simple system that can be effective in about a week.

All you need to do is understand support and resistance and use a few momentum indicators to help you enter your trades - and that's it. Combine the above with sensible money management and your all set.

How much can you make?

If you are long term trend following if you can make 50 - 60% of the major trends you would be doing well and be very rich. On forex swing trading your aim should be up to 70% of the move.

Whichever you do you don't predict - use price momentum indicators and the price to time your entry and only trade on the reality of the price you see.

The fact is there are trends all the time you can trade for profit - but most traders like to argue with the price, predict or second guess it and lose.

If you don't and just focus on trading the reality of price as it is, you could enjoy tremendous currency trading success.

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