Trend Following – The Most Popular Strategy in all Financial Markets.
Trend following is perhaps the most popular long-term strategy in all financial markets. As a trading strategy it is exceedingly effective and profitable when the conditions are favorable, is quite straightforward in its methodology, and there are many individuals, past and present, famous or obscure, who have used this strategy to success and riches. We should note that the technical aspect of trend following is in fact quite simple, but also that it requires, before everything else, discipline, sound money management, and patience from the trader. Trend following is not a short-term method , and patience and determination are as important as correct analysis as a result.
Trends are created by powerful underlying economic factors which may not be all that clear to those who are not very familiar with fundamental analysis. But the simple patterns created by the price action in response to the economic events can often be identified through methods that are easy to learn and apply. Thus, the retail trader has as much potential of success as the most experienced analyst if he can control his emotions and behave logically.
To apply this strategy we must first be aware of the existence of a trend. Without identifying a trend we would be gambling, and that’s not the purpose of trading forex. Both fundamental and technical analysis can be employed for identifying a trend, and both of them have their advantages and drawbacks. It is in general a good idea to use a combination of them for deciding on the trend’s character, and deciding on our entry and exit points.
From here, let us use the dialogue between the successful trader and the beginner in order to explain the principles in an easier way.
B: I want to use the trend following method. How do I do it?
ST: You must first choose whether you want to employ technical or fundamental analysis for your method, or a combination of both.
B: Is there a difference between these methods?
ST: Yes. Fundamental analysis can provide you with information which can predict the strength and length of a trend., while technical analysis can show you how it develops. It is possible to base your strategy on one of these to the exclusion of the other, and it is still possible to turn a profit if you are lucky enough, but our principle has always been to reduce the role of luck to as little as possible. Fundamental analysis is more reliable than technical analysis in defining a trend that has long term potential, but without technical analysis it would be extremely difficult to decide when or how to trade. Technical analysis can suggest the beginning of a trend, but it’s unlikely to tell much about the length or strength of the same. Thus, I suggest that you use both technical and fundamental methods for your trend following strategy, with fundamental factors eliminating the false signals of technical analysis, and technical tools providing you with a time-price frame for deciding on entry points.
B: How do I decide on the existence of a trend?
ST: There are many technical tools that can signal the phenomenon, but there are an equal number of false signals generated by them. Remember that there are only three kinds of trends that can exist at any time: flat, up or down, and it is possible to speak of trends between any two points on a price chart. Simply take two random points on a chart, draw a moving average on it, and the pattern that arises can be analyzed as a trend. Thus it is always necessary to have at least a basic of understanding of the economic factors that can create trends, before deciding on the validity of a chart pattern.
ST: Familiarize yourself with the big picture; understand what drives market participants; recognize the stage of the business cycle.
B: What kind of price pattern will create a trend?
ST: The trend that we seek to trade is different from random fluctuations, range patterns and similar price movements in that the price itself, in the absence of any technical indicator, can still be recognized as showing a trend. In other words, there is some driving conviction behind the price action which allows the trader to easily identify it visually. Depending on the type of the trend (that is, an up - or downtrend), successive highs and lows should constitute a rising or falling pattern, with relatively few irregularities. But such a case is often a rarity, and the trader will have to back his technical patterns with conviction that can perhaps only be gained through fundamental analysis.
B: If the trend can be identified visually, why use technical tools?
ST: Even though we can notice the existence of a trend, we still need technical tools to trade it, and time it.
B: So will you try time the market? I’m told that never works.
ST: Market timing never works when one is trying to predict reversal points on a technical basis. However market timing in the context of a trend, with the purpose of picking the counter-trend extremes, and using them to enter a trade, is necessary and profitable. And there lies the main principle of a trend following strategy: recognize the trend, identify counter-trend moves, and use them to enter a trade in the direction of the trend.
B: In a sense, then, you’re behaving as a contrarian of short scale moves, and the follower of the long-term trend.
ST: Yes. Indeed, there lies the soul and spirit of all trading. To utilize short-term irrational behaviors of the market in order to enter into long-term positions in positive alignment with fundamentals (or, sometimes just the trend), is the core of all successful trading.
B: How long should the trend follower maintain his position?
ST: Forever, or to be exact, for as long as the fundamental reasons that back the trend are dominant. If the trader cannot identify those reasons, if he’s unwilling to do so, or if he doesn’t believe, for some unfathomable reason, that they are useful, he can use technical patterns to time his exit point. Even if the trader is aware of the fundamental factors, and is able to evaluate them correctly, technical analysis can still provide him with a very useful early warning system. If the price action is suggesting strongly that there’s some error in the trader’s fundamental outlook, he can use the technical signals as an occasion to reevaluate and reexamine his fundamental picture.
B: How do I time my trade with technical analysis?
ST: The best tools for trend following are supplied by moving averages and simple price charts. Bar charts, candlesticks and many others can be equally useful if employed with moving averages. For example, between October 2007 and April-May 2008, the price action of USD/SGD always remained below the 100-day moving average. When the pattern broke down, in June of the same year, the trend had also broken down, and the price went on to break the 200-day average, and a medium-term upward trend was established. It is also possible to use moving average crossovers, and myriad other methods, but whichever you choose to use, you should ensure that you do not complicate the main aspect of your strategy, which is trend following.
B: Which time frame do you recommend for the moving average?
ST: If you want to trade on a weekly or daily basis, the 100-day MA will probably be able to capture most of the important trends for you. Anything with a longer period is likely to be meaningless because of too much data discarded , and any time frame that is too much below the 100-day period may be too sensitive to price action. But as usual, one can use other timeframes below 100, provided that he doesn’t clutter his screen with lots of indicators, charts, tools.
B: When trend following, where should I place my stop-losses and take profit orders?
ST: This partly depends on the term and nature of your trend following method. A stop-loss order can be placed a short distance above or below the trend line, whether it is provided by the moving average, or a simple line drawn on the chart. In our opinion, the trend follower should not realize his profits until he has a good reason to do so. The purpose of this strategy is to focus on underlying price dynamics by stripping out volatility and short term movements, and there is little logic to realizing profits in response to fluctuations which are irrelevant to the main action of the trend. More on where to place stop-loss orders.
B: But I still have to take a profit at some point. Where should I do that?
ST: Go as far as the trend goes, then stop. There you can take profits.
B: How do I know how far it goes?
ST: As we just explained, you can use the MAs to decide on that, but it’s far better to identify the fundamental causes behind a trend, and then to exit the trade once those causes are eliminated.
To sum it up, we can repeat that trend following is the easiest and most straightforward way of making money in the forex market. But successful trading requires the foresight provided by analysis and the patience that only comes with confidence. Those of us who prefer quick profits and instant ratification will find the method uninspiring, but it is reliable and will work wonders if you give it the chance.
Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.

Long term trend following forex

FOREX Trend Following.
FOREX trend following is the trading method the professional traders use but very few retail or new traders, use this method but they lose money so don't let the fact its not popular bother you. The world's most successful traders use it and if you do to, you will be in good company.
You can get a FOREX Trend Following Course which you can try risk free on this site. Here we will look at the basics of trend following, some free trend following systems you can use for profit and how to devise a long term trend following strategy which you can trade in just an hour a day to build long term wealth. Let's look at how to trend follow currencies in more detail.
What is FOREX trend Following?
Trend following normally refers to a method of trading which follows up or down moves in a currency pair which last anywhere from a week to a year or longer. The method is not dependent on perfect market timing and the trader will normally aim, to get around 50 – 70% of the trend which will make him huge profits. A trader who follows these big FOREX trends, tends not to trade very often but in terms of effort to reward, it's the most profitable way to trade currencies.
Why Does Trend Following Work?
If you want to know, why trend following in currencies works just look at any currency pair you want, over the longer term and you will see trends which last for long periods of time. Big FOREX trends will always be present in the market and are a reflection of the bigger economic cycle, in the countries the currencies represent. Greed or fear also drive these trends which always make them, last longer than most traders think.
Free FOREX Trend Following Systems You Can Use for Big Profits.
What comes as surprise to most traders is - there are two free FOREX trend following systems which make huge profits. In fact, the two systems which are Richard Donchian's 4 Week Rule and the Turtle trading rules, will beat just about every commercially sold robot or FOREX trading system.
They both take discipline to follow but are easy to understand, take very little time to apply and you can get these Free Trading Systems by joining our mailing list. Both Richard Donchian who devised the 4 Week Rule and Richard Dennis who developed the Turtle trading rules, are legendary traders and even, if you don't use these systems, they will show the basics of how a profitable trading system works.
Devising Your Own Trading Strategy.
When you are looking to trade long term FOREX trends with a strategy you should consider the following points:
Use monthly and weekly charts to see the big trends which very often cannot be seen on the daily chart Use the daily chart to time your trading signals Enter trades on breakouts from ranges to new highs or lows. All big trends start by breaking to a new price high or low and do so as the trend matures. This method doesn't give you perfect market timing but it does give you the best odds of success so use it. Use some momentum indicators to confirm your trading signals. There are plenty to choose from but just pick 2 or 3, use to many and you will miss moves or generate false signals. Set a stop loss on entry and keep back behind resistance or support where other traders, will have their stops so you don't get stopped out, by normal counter trend action.
If you follow the above simple guidelines you will have a simple trading method which you can execute in less than an hour a day which can generate you great long term profits.
Why Most People Cannot Follow Big Trends.
The most lucrative form of trading and also the toughest way to trade. If you look at FOREX trends, you will very often see trends that last for months or even years yet, very few traders have the mental discipline to hold these trends long term. FOREX trend following requires patience, to wait for and enter these trends when the risk to reward is at its best and then, have the mental discipline to follow them.
Why is This Trading Method so Hard to Do for Most Traders.
Because most traders are not mentally not prepared to accept big gains, this may seem a strange comment as all trader want big gains but most traders simply cannot handle short term retracements against them.
Most traders get excited when they get an open profit and the bigger this profit becomes, the bigger their temptation becomes to take it, before it gets away or turns into as loss. As the profit becomes bigger, pull-backs become more severe and erode open equity. Finally, the trader submits to his emotions and banks a small profit but if they had the discipline to hold the trade, they could have banked a huge profit.
If you are long term trend following, you need the courage of your conviction and tremendous mental discipline to ride out the counter trend swings which will occur within the big trend and hold.
FOREX trend following is tough mentally but the rewards are immense if - you adopt the right trading psychology. You need to be patient when timing entry levels and you also, need to be able to psychologically handle, short term severe dips in open equity, its not easy to do but if you do it, the rewards are immense.
FOREX trend following is the best way to make money trading currencies and requires very little time to do. To win with a FOREX trend following system, you need to have the patience to wait for the right trading signals and the discipline, to hold these trends for long periods of time and ignore short term pull-backs in equity against you.
If want to be engage in currency trend following, you should read up on Dow Theory which will give you an insight into the logic of trend following and for inspiration, read about some of the Best FOREX Traders who have made huge profits from trading currencies longer term. You should study traders such as Mike Covell, Curtis Faith, Victor Sperandeo, Jimmy Rogers, George Soros, Ed Seykota, Richard Dennis and Richard Donchian, to name just a few, of the best FOREX traders who use trend following systems.
If you want to enjoy currency trading success, use the strategy the best FOREX traders do and trend follow the currency markets for long term profits.

Long term trend following forex

Currencies tend and this can be seen on any forex chart i. e. they move in a sustained direction for periods of time. The aim of any forex trader is to lock into these trends and turn them into profits. Doing it in real time simply requires learning the right forex education and technical tools to succeed. There are essentially three separate trends occurring in 3 different time frames that you have the opportunity to trade:
The Longer Term Trend – These are the trends that reflect the underlying health of the country the currency represents. They reflect economic trends that last for months or even years.
So which are the best time frames to trade? Let’s find out.
While there are trends in daily time frames there only apparent after the day has ended. You have no chance of succeeding, by trying to catch these moves in live trading as - data within a day is unreliable and random. Support and resistance levels cannot be used, because volatility is random and prices can go anywhere.
You can’t get the odds in your favor and will lose if you try forex day trading.
There are millions of traders, trading several trillion dollars daily and it’s obvious that prices can move anywhere so don’t day trade!
Swing trading is perhaps the easiest way for new traders to implement a Forex trading system. Your aim is to catch reactions within major trends which last a few days to a week.
Swing trading has the advantage of giving plenty of opportunities and you know if you are right or wrong quickly. Forex swing trading is easy on the mind, as you have obvious stop levels and finally, profits and losses come quickly. In swing trading you don’t have the pressure of sitting on long term trends, where you have to contend with big open equity swings against you in the short term.
Long Term Trend Following.
If you can get a forex trading system to catch and follow long term trends then you have the most lucrative form of trend following but its also the hardest form of trend following and far harder than forex swing trading which we just looked at.
You will very often see trends that last for months or even years yet, very few traders have the mental discipline to hold and capitalize on these trends. Long term forex trend following requires considerable discipline and patience.
Why is it so hard to do?
The simple reason is, most forex traders are simply not mentally strong enough to accept big gains.
Don’t we all forex want big gains? Yes we all do, but accepting them is very hard.
The problem is the following: if money is important to you (as it is to most forex traders) then open equity swings against you, which eat into your open equity, can tempt you to exit a trade early.
Most traders of course feel pleased when they get a profit and the bigger the profit gets the more tempted they are to bank it, in case it gets away. As volatility swings eat into their open equity profit, the temptation to bank becomes too great for most traders and the bigger the open profit becomes, the harder it is not to take it. In the end, most forex traders simply bank taking an average or mediocre profit, when they could have had a far larger one.
If you are long term trend following, you need tremendous mental discipline to ignore short term swings against your position and keep your eyes on the bigger prize. Forex trend following is tough mentally but the rewards are huge, if it is done correctly and you have the right mindset.
New Trends & Turning Points.
Catching turning points offers low risk and high rewards if done correctly furthermore as you are in at the stat of a new trend, these turning points normally see profits piled up quickly as the new trend emerges. Catching turning points is satisfying, very profitable, furthermore, as you are in at the start of the trend, you have the best risk to reward.
The key is to WAIT for clear confirmation of a trend change, before getting on board. Most trend changes emerge after short term price spikes that are easy to see on a forex chart. As the price blows off, you can see it and act upon it, if you use the RIGHT technical indicators.
Catching Trends for Profit.
You really have a choice for going for the big long term trends, or you can swing trade shorter moves but never day trade!
The trends you go for will depend on your trading personality and both swing trading and long term trend following have there advantages. If you look at a forex chart, you will see trends and you can catch them – all you need is to act on the reality of price change and use a simple robust trading method.
Next we will look at a trend following system to help you catch these moves and enjoy currency trading success.

Long term trend following forex

Forex ponzi scheme Forex fraude colombia Best forex trading in pakistan Dte applyforexam com admit card Knowledge to action forex trading Alguien ha invertido forex Long-term strategies for trading FX. Long term trading strategies. Positional trading exemplifies how to trade Forex long-term. It involves identifying a trend, then following it for weeks or months. In some cases, traders have followed a trend for over a year. When applying long-term Forex trading, buy based on expectations. CitiFX® Risk Advisory Group. Trend Models can simple trend strategies work long term? Dr Jessica James. Investor Risk Advisory Group Trend is popular. ◇ 85% of CTA returns are explained by simple trend following. ◇ The figure rises to almost % when carry and option trading are included. ◇ They are without. Trend traders attempt to isolate and extract profit from trends. There are multiple ways to do this. No single indicator will punch your ticket to market riches, as trading involves other For investors and long-term trend followers, the day, day and day simple moving average are popular choices.
3 moving averages forex.
Here are the top 10 option concepts you should understand before making your first real trade: