Trend trading or trend following is a trading method that follows the trend of the market. Why should you trade with the trend? This article will share that.
First, we agree that trading with the trend or trading against the trend is both good, as the content in the article "Equilibrium Zone In Technical Analysis" mentioned.
So we "should", not "force" trade with the trend. That is, you trade to create winning orders and generate stable profits is to reach the goal. But if you trade with the trend, there are advantages to consider, and this also helps guide your strategy for building your own trading system.
Specifically, there are 3 reasons we should trade with the trend, including:
1. TO CHANGE 1 TREND IS NOT EASY AND NEED TIME:
In fact, the movements in the market show that most of the time the price moves in a trend. And price reverses in very short period of time.
For the trend to reverse is not easy, it needs to have a large enough impact of events, of traders' psychology, of the number of participants in the market, of trading volume, ...
When trading with the trend, we will trade most of the time the price moves, then we trade with a much greater probability of winning.
2. CREATE STABLE STABLE IN ANALYSIS:
As shared above, what we need to do is to accurately identify the trend, then only follow the trend and trade in one direction (increase only BUY and BUY, decrease only SELL) until the trend When the direction changes, we wait for the new trend to set up, then we follow that new trend to trade...
And of course, trading in the direction of the trend gives us a very stable psychology when analyzing, forecasting and even when trading, we will find a very calm mentality when looking at a negative or positive order because the The direction is clear, and only trading in that direction... And when the mind is stable, the wisdom also goes along, then forex trading is no longer pressure or stress, that's the basis. for gradually improving efficiency, leading to a path to sustainable success.
3. CAN EXIT OR ORDER IF THE PRICE IS WRONG IN EXECUTIVELY:
An extremely important thing in trading is finding the right stop loss and take profit. With a trend-following trading strategy, the stop loss is the point where the price officially breaks it, the trend will change, and the take profit point can follow support or resistance levels, or even we can hold the order to get more profit (hold until the trend officially changes, then take profit)
Here are some suggestions if you are trading with the trend:
- It is necessary to accurately determine the main time frame, this is based on the trading goal of each order (how many pips), the trading time (long or short)... Only then will the exact coin be determined. direction of that main timeframe, as the basis for trading.
- It is necessary to combine 2 more timeframes: 1 larger timeframe and 1 smaller timeframe, the larger frame is used to identify possible price areas where a reversal may occur, and the smaller frame is used to darken. entry advantage.
- Only CLEAR TRENDING cases should be selected to trade, in unclear cases should not be traded, remember that with the forex market there are hundreds of commodities, including 28 currency pairs. and gold. So when you feel unsafe, choose another currency pair, or wait for another opportunity.
- In an uptrend, when the price rises and pulls back for the first time, it is the best opportunity to buy, need to be more cautious in case the price makes 2 peaks and pulls back because then buying will be risky. than in the first case. The downtrend is the opposite.
Best regards,
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