Most novice traders like the scalp and day trade the noise of the market while the smart trader, locks in to and holds the big trends which yield the big profits. Forex trend following, is the best way to make money in trading currencies and you even better, you can do all your trading in 30 minutes a day – lets look at how to trend follow in Forex.
If you look at any currency, it will either trade up or down for many weeks, months or in some instances years and these are the trends that if you get into them and hold them, will give you huge profits and the method you can use is very simple, as it’s based on the way all big trends start and continue.
So how do all the big trends start and continue?
They start by breaking to new chart highs and continue breaking them as the trend evolves and develops so if you want to get in on all the big trends the way to do it is simple – buy breakouts.
Breakout trading is easy to do but you must be selective with the breaks you choose to buy and these should be levels that have been tested and held, several times before the break occurs – In pure simple terms its the more tests before the breakout the better.
I like to focus on six or more tests and to increase the odds even more, I like at least two of these tests to be wider than a month apart. The wider the spacing in time between the breaks the better the odds are, of the trend continuing when the break eventually comes.
The great advantage of breakout trading, is you don’t have to make any subjective judgment – you simply trade when resistance is penetrated and get long and do the reverse in a bear market.
You can trade breakouts using just simple support or resistance but it’s best to add some momentum indicators to increase the odds even further; if you use a couple of momentum indicators, you can check the velocity of the price as it breaks out.
Most traders don’t trade breakouts because they like to try and predict the move in advance whereas breakout trading doesn’t do that – you miss the first part of the move but the good news is no one can predict a low but if the breakout is valid, the profit potential in front of you is huge in relation to the small bit you have missed! You can never be perfect in Forex trading but that doesn’t matter you can make money if you trade the odds and there is no better way of doing this, than trading breakouts.
Base your currency trading strategy on Forex trend following via breakouts and you could be on the road to a triple digit income in around 30 minutes a day – good luck!