The Best Trend Trading Strategy

Trend trading is one of the most popular and widely used trading strategies among traders. Trend trading is an effective method, which can help to generate profits by identifying and capturing the trend just after it has started and trying to get out of the trend as soon as possible after it reverses. Generally, many traders and investors prefer to trade the long term trends, because by this way they prevent themselves from being concerned about the day-to-day market volatility.  With trend trading investors have a unique opportunity to catch many intermediate and long term market movements and thus earn money. However, it should be noted, that Forex trend trading is not that easy as it may seem from the first sight. And before taking up trend trading, it is quite essential to have overall understanding about the market trends, because they are incredibly important to those who are trying to develop a trend trading strategy and earn money in the market. Now let us find out what trend is.

Forex trend is defined as the direction in which the market moves. As it is known Foreign Exchange market is very changeable and it does not move straightly. Its moves are described like zigzags, which resemble the subsequent waves with clear highs and lows. Accordingly, depending on the movement of those highs and lows, trend is divided into the following three types:

• Uptrend – when the price of an asset is moving upwards
• Downtrend – when the price of an asset is moving downwards
• Sideways – when the price of an asset keeps on fluctuating within a certain range.

As was mentioned above, the role of trend is significant, because when it comes to the development of the trend trading strategy, investors come across the following trading decisions: to go long or to buy, to go short or to sell and the last one to stay aside.In order words, depending on the type of a trend, an investor should develop a specific trend trading strategy.

When the market moves upwards it is preferable to use the buying strategy and when the market goes down it is advisable to use the selling strategy. However, when the market goes sideways, it would be better to stay aside and do nothing.

Now, you are familiar with the main trend trading strategies and it’s time to follow the trend, think carefully and make the right decision.