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12 Unbreakable Rules For Trend Trading

Trend trading can make you lots of money in the forex market if you can:

  • correctly identify trends
  • get into a trade at the right time
  • and ride out the trend

So here are 12 Trend Trading Rules every forex trader needs to know and follow:

Trend Trading Rules Trade What You See And Not What You Think

Many times, I see a trade setup that i do know I ought to take…but guess what? I start to question it, I begin to analyse it lots more than I should and lots of times, i’d not take that trade. Later once I check the setup, the market has reacted based on what ” I saw” and not on what i assumed.

Trend Trading Rules Read the Charts and Not The News

This merely means that, you’ll be able to create all of your trading decisions to buy and sell based on the charts. once you browse news regarding certain stuff you wish to verify before you buy or sell, then the problem here is that the proven fact that you’re currently making an attempt to urge someone’s opinion to influence your trading choices and once you retreat to to your charts, you may see your chart telling you that its the correct time to buy or sell however the news that you’ve just browse tells you one thing totally different. currently you have got 2 conflicting choices.

Some of my best trades happened once I merely set and “forget”. What do I mean by that? Well, it suggests that I entered into a trend trade {and simply|and easily} made up my mind that i’ll not move my stop loss to break even too soon or move my trailing stop too closely or take profit too early however simply simply let the market to its job.

By doing that, you avoid exiting too early when you should have made a lot more profit:

Trend Trading Rules Learn to set and forget your trades

Trend Trading Rules Buy Dips In An Uptrend

The reason is pretty simple for buying dips in an uptrend:

  • you get in at the best price
  • your stop loss is tight and that means you increase your Risk:Reward ratio and therefore should the trade go in the direction of the main trend again, you stand to make a lot more profits.

Trend Trading Rules Sell Rallies In A Downtrend

Similar to buying dips in an uptrend, for downtrend, you should sell rallies and the reason are the same as those of buying dips:

  • best entry price levels
  • tight stop loss and good risk:reward ratio of trades

Trend Trading Rules Dont Try to pick the top or bottom

There will be times when you will pick tops and bottoms precisely based on your forex trading systems but then there will be times when you won’t. Don’t spend all your effort trying to pick tops and bottoms.

There’s  a saying that says: Don’t try to catch a falling knife.

Trend Trading Rules Cut Your Loses Short

A wise trader always cuts his loses short. He knows there will be another day when he can trade the opportunities that will come.

Trend Trading Rules Let Your Profits Run

If you cut your losses short and let your profits run, what do you think that will happen to your forex trading account? Simple, it will increase because you are making more profits than you lose.

Trend Trading Rules Apply Pyramid Trading Technique

One of the best ways to increase your trading profits so fast is to apply the pyramid trading technique. You do this without increasing your trading risk at all.

Trend Trading Rules Keep a long term view of your trades

Trend trader ought to keep a protracted term view of the open positions. At the rear of you mind you must be thinking that: “This trend will do on for several days.” check out wherever price has been within the past on those larger timeframe. are you able to see the previous swing highs and swing lows?

You see, if price has been there within the past, it may go there once more.

This is term thinking. this is often long term view.

Know that because the price moves towards your profit target, it’ll have daily fluctuations and through the initial stages close to your entry level, you will have a floating loss for days till the market moves within the desired direction.

So having an extended term view is imperative in trend trading. And once the trend kicks it, currently that market has its upswings and downswings whereas it’s in a trend and those shouldn’t deter you thinking the trend is dynamic .

Trend Trading Rules Stick To The Trading Plan

A trading plan should be simple and robust enough to cover all the basics like:

  • when do you enter a trade and what conditions have to be met. This mostly will come from your trading system’s rules.
  • how much do you risk on a trade
  • what trading sessions or what trading times you have to trade.
  • do you have to trade everyday as a day trader or are you more of a swing trader/trend trader type?
  • your maxing consecutive trading loses before you  quit trading for the day or for a while.
  • where will you exit?
  • where will you take profit?
  • how will you trail stop your trades?
  • how will you apply your trail stop technique

These are some of the things that should be included in your trading plan.

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