Professional traders often think trend trading strategy is the best way to ensure survival in the Forex trading industry. This statement is very true when it comes to novice traders. The majority of the novice traders fails to take the right decision in the trading industry as they don’t have any knowledge about the market dynamics. They take random steps and messes things up and loses a significant portion of the capital. To become good at trading, you must learn to ride the major trend with a high level of precision.
Today, we will give you some powerful tips which will help you to ride the major trend with a high level of precision. Make sure you read this article with great care as it will change your life.
Selection of the time frame
You should select a higher time frame to draw the trend line in the market. Failing to use the higher time frame data will result in big losses. Most of the rookie traders try to find the trend line support and resistance level in the lower time frame. Eventually, they take the trades in favor of the retracement. To avoid such a problem, we strongly recommend you to trade in the daily or in the hourly time frame. By using the higher time frame data in the market, you should be able to avoid the retracement phases in the market.
Testing the trend line
Before you take the trades in a trend line, you need to see a valid test. The price tests the support or the resistance level of a trend line and forms nice trade setups. In other words, we are asking you to look for the price action confirmation signals. Look here and learn about the basics of price action trading strategy so that you can take quality trades with a great level of comfort. Once you become good at analyzing the major trend lines in the market, you should feel much more confident with your actions. You will learn to take the trades in favor of the trend with more precision.
Use of moving average
The novice trend traders often find it hard to find reliable trade signals in the market. They mess things up as they don’t know the proper way to analyze the highs and lows. But if you use the moving average, you can easily avoid such problems. Set 100 period moving average in the main chart and you will feel much more confident with your actions. Never think you know every bit of detail about the market. Learn the use of the moving average in the demo account so that you can make wise decisions at trading.
Risk to reward ratio
Being a trend trader, you should focus on the risk to reward ratio factors. Failing to manage the risk to reward ratio in the trades will result in big losses. Most people think they know everything about the market. But if you do the proper research, you will realize, trading is not about finding the trend. You also need to ensure a high risk to reward ratio in the trades. If you take the trades with the trend and fail to find a high risk to reward ratio, there will be no real benefit. You will be losing money most of the time. So, we strongly recommend that you learn to find the proper risk to reward ratio in the trades.
Avoid trading the news
To trade the major trend, you need to execute the trades during the stable condition of the market. So, avoid taking the trades during the major news release. If you take the trades on such market conditions, you will be losing money most of the time. Eventually, things will become worse and you will quit trading. So, learn to analyze the major news to become good at trend trading strategy.