How to trade the major trend line in the Forex market
A trend trading strategy is one of the most effective ways to make a profit in the Forex market. As a new trader, you might think mastering the art of trend trading strategy is easy. But when it comes to real-life trading, you will feel complexity associated with Forex trading profession. Though a trend trading strategy is one of the most effective ways to make money in the Forex market but learning to trade the major trend requires an extreme level of patience. Today we are going to highlight some amazing techniques followed by the experienced trend traders in Hong Kong. Let’s begin.
Analyze the weekly time frame
The majority of the traders think analyzing the daily time frame is one of the most effective ways to find great trades. But in reality, daily time frame trading also generates false trading signals. It’s better to analyze the weekly time frame since it will give you the broader picture of this market. Though weekly time frame trading is extremely boring this is the only way to trade the major trend line with an extreme level of accuracy. Try to connect three higher lows to get the bearish trend. For the bullish trend line, you need to connect three lower highs. Once you find such conditions in the market, you will get a class trend line.
Wait for the price action confirmation signal
Now you know the proper way to find a high-quality trend line. However, youwill still not be able to make a profit from this market. Instead of using pending orders at the trend line support and resistance zone, you need to wait for the price action confirmation signal. For that, you must use a professional trading platform. Visit https://www.home.saxo/en-hk to learn more about the premium features offered by elite class broker Saxo. Once you spot a valid price action confirmation signal execute the trade with proper stop loss.
Dealing with the losing trades
Despite all the hard work, you will often lose trades by following the weekly trend line trading strategy. No trend is perfect. You must be prepared to lose trades without having any prior notice. This is where the term stop-loss comes into action. You must use a decent stop loss while trading the major trend of the market. Some retail traders prefer to use the candlestick pattern to set the stop loss but some prefer to use the critical support level. There is no obvious or fixed rule to set the stop loss. If you get confused, you can use the demo account and see which things work best for your trading style.
As a trend trader, you should never become overconfident. Trading is all about dealing with the losing trades in an efficient manner. Regardless of the quality of the trade setup, always risk 2% of your account balance. However, if you feel extremely confident with the trades, you can risk up to 3% of your account balance. But the smart traders prefer to risk only 1% of the account balance since even the very best trade setups often fail.
Using technical data is not enough to trade the major trend line. You must learn the proper way to assess the fundamental variables of this market. Learn more about the impact of high impact news since it will greatly help you to make the right decisions in trading. Mastering the fundamental analysis might seem a little bit challenging at the initial stage but once you start to understand the impact of major news, things will become easier.
Learning is a continuous process when it comes to trading business. Unless you keep yourself in tune with the latest market dynamics, you are bound to lose a big portion of your investment. Take your time and keep learning new things about this market. Always set realistic goals to become better at trading.