Everyone thinks trend trading strategy is very easy. Some people often start to trade the market just by learning to draw the trend line. But if you do some research, you will realize, trend trading method is one of the most advanced trading techniques used by professionals. It takes years of practice to master the art of trend trading techniques. As a trader, you might be thinking that you know everything about this market. But if you carefully assess the overall condition of the market, you will realize that you barely know anything about this market.
In this context, we are going to give you some amazing guidelines that will allow you to trade with the major trend like a pro trader. Follow the tips mentioned in this article as they may change your life.
Choosing the trading instrument
To become good at trend trading strategy, you need to learn the proper way to pick the trading instrument. If you pick an instrument that always stays in the ranging movement, you are not going to make any profit by using the trend trading strategy. Many exotic pair exhibit such price movement and it makes tough for the investors to find the good trade setup. Start your trading career by analyzing the major currency pairs. Once you become good at analyzing the major pair, you may move to the minor pairs. Try to use the highs and lows of the market to assess the prevailing trend of the market.
Perfect trend line
Professional traders always encourage retail traders to draw the perfect trend lines in the market. To draw the trend line properly, you have to connect three higher highs or lows in the market. Learn more about the key swings points so that you can effectively draw the trend lines in the market. Once you become good at analyzing the key swing point, try to draw the trend line in the higher time frame. Avoid taking the trades in the lower time frame as it will make things worse and create confusion during the live trade execution process. It might take a while to get used to the overall concept of trend trading strategy but once you become comfortable in drawing the trend lines, you should have zero trouble in finding the good trade signals.
Look for the price action signals
Being a smart trader, you should not set pending orders at the trend line. It would be wise to learn price action trading strategy as it will allow you to trade the major trend line with precise stop loss. Moreover, you will become more confident with your actions and thus you can earn more money. You might be thinking that you know a lot about the candlestick pattern. But you can’t conclude without back-testing your skills. Get a professional demo account from the high-end broker Saxo and see if you can make a consistent profit by using the reliable candlestick pattern. If not, you should study the formations of the candlestick patterns from the scratch.
Focus on the news data
You should never trade the major trend line without doing the fundamental analysis. At times, the major trend line will break due to the impact of economic news. So, if you ignore the fundamental factors of the market, you will never know what it takes to become a professional trend trader. Once you merge the fundamental and technical factors with your trend trading strategy, you should be able to make more money with a great level of ease.
So, focus on long-term goals and try to take the trades in a standard way. Forget about the aggressive approach and keep your risk factors low. If you become confused with the news data, ignore the trade signals and wait for better opportunities. Never become too aggressive thinking that it is the best trade signal in the market.