Trend Following Currencies - How to Catch Every Big Move

by : Kelly Price

Trend following currencies can be a great way to make money - but seeing them on a forex chart in hindsight is easy - but trying to capture them in real time is a bit harder however it can be done - if you follow the simple tips enclosed. If you use these tips to catch currency trends, you will catch every big move and enjoy currency trading success so, let's look at them.

The first things you need to remember is to "forget buying low and selling high" and think "buy high and sell higher" - it's a fact that most big moves start from new market highs and NOT market lows. The other wisdom you must forget is predicting price movements - this is another word for hoping and guessing and that's not a way to make money in any venture let alone forex trading. The way to win is to act and execute trading signals on price breaks and use a breakout methodology.

Breakouts are used by all the world's top traders and you must learn to trade them to. So what is a breakout?

They are simply a break of resistance or support to make a new high or low respectively.

All breakouts are not the same and some are more valid than others. The way to find the ones which can yield big moves is to look for an area of support or resistance which has been tested several times and the more the better. Also look for several different time frames and the wider apart the better.

The more times a level has been tested the better - but look for at least 3 in two different time periods. When the level breaks, you execute your trading signal in the direction of the break. You should check that the velocity of price is accelerating in the direction of the break and for this you need to use some momentum indicators to confirm your trading signal. We don't have time to discuss them here, simply look them up in our other articles.

Once the breakout has occurred simply place your stop below the breakout point.

Sounds simple? It is - but most traders can't do it.

They want to hold on and wait for a better price to buy at but wait in vain as strong breakouts don't retrace and the trader not in watches the price sail over the horizon and he thinks of what might have been. If you do it you will be in on every major break and while it is simple the best forex trading strategies are but that doesn't mean there not profitable.

If you trade selectively and go with the valid breaks you will be in on every big move and be able to follow the big trends which yield the big moves. Keep in mind you don't get paid for effort or how often you trade in forex but for being right and that's it.

So learn to trade breakouts and you will have simple timeless strategy for big profits.