Learning To Trust Yourself When Trend Following

Learning to trust yourself when trend following takes time and a well thought out plan. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. THE RISK OF LOSS IN TRADING COMMODITY FUTURES, OPTIONS, AND FOREIGN EXCHANGE (-FOREX-) IS SUBSTANTIAL.

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Forex Charts – Make Bigger Profits by Following These Key Points

Forex charts are a great, time efficient and proven way to make bigger profits but most traders don’t use them correctly and here we will give you some key points to help you make bigger profits…

Let’s look at some key points for more profitable technical analysis with forex charts.

If you look at any forex chart you will see big trends that can last for many months and trend following these can be very profitable and if you want to make money out of them you must understand this key fact:

Most big trends start and continue from breakouts to new highs and lows on the chart and you must go with these breaks – most traders don’t. They want to wait for the pullback and of course it never comes and they are left behind. While it appears like you have missed the first part of the move, the odds of continuation are high so go with them.

Always be patient when using forex charts. You don’t get rewarded for your efforts or how many times you trade but being right with your trading signal. I know traders who trade just a few times a month yet make triple digit gains – so wait for the right opportunities.

When you have a trend you want to hit always check price momentum is on your side and make sure that you use momentum indicators that show price acceleration in the direction you wish to trade. Two great ones, you can learn, in about 30 minutes are – the stochastic and RSI. These two combined will increase your odds of success by getting the odds more on your side.

Never believe anyone who tells you there is a mathematical formula for market movement – there isn’t. If of course there was, we would all know the price in advance and there would be no market. So forget trying to predict and only trade the reality of price.

Its probabilities that you need to understand and like a successful poker player, you won’t win every hand – but if you keep trading the odds, you will win long term. When using forex charts, the simpler your forex trading method the better, as simple systems tend to be very robust and have fewer elements to break, than complicated ones.

I have used a simple breakout method which uses trend lines, RSI and the stochastic and made money with it for over 20 years sure, it’s simple but it works. Forex charts give you the reality of price before your eyes and you can spot areas of over valuation and under valuation. Humans create trends and they also (due to their emotions) push trends to far up or down in either direction.

You can of course ride trends – but you will also see big price spikes and history tells you they don’t last long and taking trades contrary to the majority can be very profitable. Charting is an art not a science and you need to practice your art. The successful captain of a ship uses charts to navigate safely, but he also knows that use them wrongly and he will drown and it’s a very similar situation in forex.

The Good News

You can learn forex charting in around 2 weeks and soon be piling up big profits in around 30 minutes a day spotting and hitting high odds trades and enjoying great profits. The good news is forex trading and using technical analysis is a learned skill and one you can master with a little practice.

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Forex Day Trading V Forex Trend Following Which is Best?

If you want to make big profits in forex trading you need to decide the time frame you wish to tradhere we will compare forex day trading with forex trend following and the clear winner is…

Forex trend following.

It’s really a no contest because day trading doesn’t work. Before we compare the two lets get rid of the myth day traders make money. You have seen all those fantastic track records – but they all have a problem and it’s this disclaimer:

“CFTC RULE 4.41 – Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown”.

So there you have it – the track records are made up and that’s why you see a winning track record. Of course if you have read the above doing a track record looking backwards is easy, doing it real time is hard.

Let’s compare the two methods of trading:

Validity of Data

Of course if you want to trade you need data and this data needs to be reliable.

Forex day trading data simply is not. Why?

All volatility within a day or a few hours is random. You can’t trade it no matter how good your system is. Support and resistance in short periods is not valid and daily price moves can go anywhere.

Once you move to trend following the data is over long enough periods to trade the odds and that’s exactly what you need, to have a chance of currency trading success.

Cutting losses

You can cut losses in both but due to the nature of day trading your going to have a lot of them. There is no real difference between the two discipline here they can both keep losses small. Now we need to look at profits – you need these to cover your inevitable losses as the old saying goes so lets see which method is best.

Running Profits

The day trader has huge amount of losing trades and will get lucky and win now and again however what do day traders do? Cut them! So they have small losses (a ton of them) and an occasional profit which is small.

What does this mean?

An eventual wipeout of equity.

The trend follower has a distinct advantage he can keep his losses small and run his profits and they can be huge. The big forex trends can last for weeks or months and if these are held, profits can easily cover losses and make a big long term gain.

I know people who trend follow and lose 80% of the time – but they make triple digit annual gains because they run their profits.

Finally…

There is a huge industry in online trading that promotes day trading as an easy way to riches – just follow the simulated, back tested track record and win but no one does long term.

Day trading is promoted as low risk but its actually high risk.

Forex trend following if done correctly, can help you achieve currency trading success and really there is no contest between the two – if you want to make money, try forex trend following and forget day trading.

If you get the right forex education and a simple robust long term trading system you can enjoy trading success.

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