Trend trading is the easiest way to make a profit trading forex, when the market is trending, this is when the support and resistance areas are much clearer, and going with the market is much easier. Counter trending is a big no no, it’s still not given that you will make a profit when trading with the trend but to go against a trend is a sure fire way to quick failure.
Identifying Forex Trends.
There are a number of ways to identify trends in the forex markets, you can analyse market structure where you look at swings and if they are higher or lower than the previous, you can use computer technology to help, you can use trend indicators, and there are probably many other techniques you can use. But one of the easiest and most effective ways to do this is to just look at the longer timeframe charts and look to see where the price is heading. The thing is with trends is that the easier they are to identify the better, as a trader what you should always be seeking is clarity, trading in an unclear market is much tougher and the key to success is to be patient and wait as long as it takes for clarity to appear. You will often see traders claiming to be clever by identifying moves early, but this is a fallacy, it is unlikely that they can actually do this reliably, and even if they do, it probably isn’t suitable for you as an inexperienced trader to do this effectively.
Make Forex Trading Easy for Yourself.
Patience is the key to forex trading, and this is much harder than you think, even for the most patient of people, It can be so hard to stay out of the market, it’s there, moving all the time, enticing you to enter. It doesn’t matter what system, strategy or approach that you take, if you don’t have the patience to stay out, you are going to loose money, you don’t make money in forex trading by trying to be clever, patience will always win over cleverness. If you take a look at the daily forex chart of the EURUSD and look at for example April 2013, you can see that it ranged for nearly a whole month within a 100 pip range or so. Trying to trade in such conditions can be extremely tough, and if you don’t have the patience to wait until the market starts trending again, you are more than likely to end that period at a loss. If you stay out of the market then you won’t loose, and it is absolutely imperative that you get this, you must accept that you just won’t make a profit this month, the market will always come out of these consolidation periods and provide you with more clarity for your trading. If you’ve been out of the market, then you still have the capital that you can use to take advantage of the market when it does start moving again, being patient is the clever way to go, and not trying to analyse randomness.