Many investors are familiar with trading stocks, options trading, and a buy and hold trading strategy. Forex trading has become more popular in recent years amongst retail traders, strictly due to the advancement of technology and easily accessible software products and tools for analyzing the markets. What’s more, the potential for gains in the Forex market is tremendous due to the currency market’s prevalent price fluctuations.
The Challenge of Countertrend Trading
Whether you are involved with forex trading or options trading, trend following lends more stable results. Talented countertrade traders do exist as well as traders who scalp the market. Even when trading in shorter timeframes, trend following makes logical sense. It is the rare countertrend trader who can predict the perfect entry point for a price reversal. If a trader is out to make bank with the Forex, trend following is the way.
Forex Trend Following
Many seasoned traders advise their mentees to trade with the trend. While this is good advice for a variety of trading instruments, it is especially useful advice for trading the Forex market. As a fast-moving market, depending on which currency pair a trader is trading, he can easily find himself up by hundreds of price interest points (pips) within a single day. If the market is truly moving due to an economic news release, then the price movement may even occur within the course of an hour, particularly when trading the Great British Pound (GBP) currency pairs.
For the safest and most lucrative results, analyze and place Forex trades in line with the long-term trend.