Trend trading strategy is a very effective way to make a big profit in the market. People who have the skills to ride the major trend can trade this market with a very low-risk profile. Most importantly, they don’t have to trade too often to secure a steady cash flow. As a new trader, you may think you know enough to take the trades with the trend. Before you rely on your gut feelings, you should test your skills by trading the demo account. Once you do that, you will know about lacking in the trading profession.
Riding the major trend is not that tough once you use proper logic. In this context, we are going to give you some amazing guidelines that will allow you to ride the trend just like a pro trader. So, without any delay, let’s get into the details.
Highs and lows
Professional traders use the highs and lows to find reliable trend lines. To draw a valid trend line, you need three higher lows. On the contrary, for a valid bearish trend line, you need to connect three lower highs. The concept is really simple but the rookie traders always find a way to break the rules. For instance, they draw the trend line with two connecting points and at the third point, they take trades with big hope. Eventually, they lose money from that certain trade and get frustrated.
To learn about the critical swing levels, you hire a professional mentor who has extensive experience with the market. Since the Forex trading profession in Australia has become popular, it won’t take much time to find a reliable mentor. You should also choose a well-known Australian forex broker where you can open a trading account.
H1, 4H, and daily time frame
You should be drawing the major trend lines in the higher time frame only. Being new to this market, H1, 4H, and the daily time frame should be your top priority. Unless you do that in an effective manner, you will keep on losing money and there is no way by which you can protect the trading capital. Though a higher time frame will provide an easy means to find the potential trading zone you have to be very passionate about your actions. Unless you do that in a systematic way, it is going to be a tough task to ride the trend.
Study the candlestick pattern
Being a trend lover, you should be using the price action confirmation signals from the start. Without learning about the price action trading method, things are very going to be a bit complex as you won’t have any precise point to place the stops. It’s true you can set the stop loss based on the trend line support and resistance but it will be a bit wide. To tighten the stops, you should be learning about the candlestick pattern. In short, we are suggesting you use the price action trading strategy to execute the trades’ at the most important levels.
Never think learning about the candlestick pattern is a tough task. Many professional traders are using advanced Harmonic Patterns in the Forex Markets to find the endpoint of the retracement in a trend. If they can use such a complex method, you should never feel challenged to deal with the candlestick patterns.
Analyze the risk profile
Never expect that the trend in a market will not change. If you do some in-depth data analysis, you will notice the trends often get changed due to the high-impact news release. Even after doing the news analysis, the traders often fail to detect the reversals. So, how do we deal with the major trend reversal? The answer is lies within your risk management plan. You must have the skills to accept few losing trades in this market. Limit your risk factor to 2% of your account balance and it will give you an easy scope to make consistent profit in the market. Once you do that in a systematic way, you should feel more comfortable and the losing trades are not going to affect you more.