Trend Trading Definition

Trend trading is the main requirement of experienced traders to newcomers. Without it will not be possible to earn money competently, any efforts. Any financial market strategy implies, to varying degrees, the use of a trend. Some use the trend itself for good, others seek the benefit of potentially loss-making. We will consider three effective strategies, using which, will be able to earn baseless at tiny risk.

Imagine a pilgrim who decided to discover the secret of trading 300 years ago. It sounds strange, because such a picture in the head will quickly draw. He walked through many difficulties: deserts, valleys. The value of water for him was less than this secret.

He met a sage who was recognized as the most powerful trader. He was asked by a novice trader, what is the secret of wealth? The wise man replied, “The trend is your friend”.

About A Good And Bad Friend

But in fact it is a fairy tale. Of course, rational grain is there, but friends can frame. The same goes for trends. You saw an upward trend, decided to open a deal for a raise. Then the trend turned sharply. You didn’t expect it. He stole a decent part of your deposit.

And what to do to make the trend help you? And here it is necessary to use the old rule of friendship: “trust, but check”. Therefore, it is worth carefully examining the three strategies below to prevent a friend from standing up.

Trading At An Early Trend

In general, the specifics of trading is this: you need to see a nascent trend where others do not notice it. The first step to generate revenue for this strategy is to analyze the range of quotes for a certain time. It is done as follows:

  • Watch about 100 bars (well or candles).
  • Ask yourself a question: “have these quotes moved sideways?” Respond in the affirmative – around these candles draw two boundaries – support and resistance.
  • Wait until the candle closes above or below one of these boundaries. A trend is likely to be born here. Open the appropriate position, rejoice.

The advantage of such a strategy is that the trader can use a schedule with any period – five minutes, day, week, month. Trade will remain successful.

Early Stop

This is not a profit-making strategy, but a method of insurance of losses. It begins the same way. Quotes are rolled back to the middle level – need to close the deal. The likelihood of further trend retention here remains incredibly high.

Adding To The Winning Position

Is everything going smoothly? Then it is recommended to add to the first trade contrary to the actions of new traders. The trend promises real benefits, then why not take advantage of them, right?

The main morality is phrase-phrases, but they may have a dark side. Take the same expression “trend is your buddy”. Yeah, but he can betray. Therefore, logic must be followed. Profitable trade is simply secured with due diligence over success.