The trend is your friend, is a well-known phrase in the Fore market. But in real life trading, very few actually understand how to trade along with the market trend. The majority of the new traders are losing money because they end up by placing trades against the major trend. On the contrary, the pro-UK traders are riding the long term market trend and making a decent profit even at the complex market condition. Due to their strong trend trading strategy, they are able to make a profit at any market conditioning order to lead your life based on trading, you must focus on simple trend trading technique. Let’s learn some simple technique which will help you to create a powerful trend trading strategy.
Develop your psychology
Before you start to trade the real market, you need to develop your mental strength. Trading is all about managing the losing trades in the most efficient way. Unless you learn to embrace the losing trades, you will never be able to trade the market in a conservative way. Learn to trade in a conservative way is the first key ingredient to develop a perfect trend trading strategy. Being a trend trader, the pro trader even waits for a week only to find one good trades. You need to think like the pro traders, only then can you develop your patience level.
Testing your strategy in the demo account
Once you are confident with your trading psychology, it’s time to use the demo account. The experienced UK traders prefer to use the Saxo Forex trading demo account since they offer a robust trading platform. Try to find the long term market trend using the simple trend line tools. Some of the rookie traders often make things complex by using EMAs and SMAs. But in reality, SMAs and EMAs are more like trade filter tools. You can’t assess the market trend with an extreme level of accuracy based on the indicator readings. To find a valid uptrend use three higher lows and for the downtrend use three lower highs. The fourth point in the trend is your trade execution point.
Execution of the trade
Now you know the proper way to find the trade execution point by using a trend line. But do you really think you can make consistent profit by executing the trade at the fourth point? To be honest there is no exact answer to this question. However, the prop trader prefers to use the simple price action signal since it boosts their win rate. For instance, if you spot a bullish price action signal right at the trend line support level, chances are very high the bulls will take control of this market. Similarly, if you spot a bearish signal right at the bearish trend line resistance level, you might be able to execute a decent short trade.
Setting up the stop loss
Trading the market with the trend line might seems really easy. But what about the stop loss and take profit level. Those who trade the market with the price action confirmation signal uses the Japanese candlestick pattern to determine their potential stops. On the other hand, those who trade the market without any confirmation signal had to use a wide stop loss. When it comes to setting up the take profit level, you need to use the nearest support or resistance level. As a full-time trader, you need to make sure you never execute any trade with a very high risk. Try to minimise the risk exposure in every possible way and it will help you to make a better decision.
Trading the real market
Start trading the real market once you have a clear understanding of the above topics. Being a new trader, make sure you limit your risk in every possible way. Use a low leverage trading account so that you are forced to trade with low risk.