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Four Golden Rules for Trading with the Trend

Photo by Kevin Ku on Unsplash

There is a saying in the investment industry: “The trend is your friend.” In other words, if you want to survive in the retail trading business, it’s imperative you learn to trade the market with the trend.

New traders often fail to understand the importance of a trend-trading strategy. Therefore, they end up executing trades against the market trend. Such an approach might help them make a profit early on in their trading career. However, in the long-term they are likely lose more than they win.

Though studying all the ins and outs of the investment business can be difficult, you can learn to make a profit by following the four simple rules listed below. These rules will teach you how to use the market trend to your advantage.


Trade Using a Daily Time Frame

Trade the market using a daily time frame. Otherwise, it will be really hard for you to make money online. Keep in mind that those who try to scalp the market always lose money in the long run.

But if you truly want to make a profit, you need to find high-quality trades. As a trend trader, you might think that trading with a longer time frame is boring. However, without patience, you won’t be able to find great trades. Therefore, stop trying to overtrade the market. Instead, try to find quality trades. In this way, you will more easily make a consistent profit.

Use the Price Action Confirmation Signal

Executing quality trades using the price action confirmation signal is one of the easiest ways to ride the long-term market. Additionally, if you’re a new trader in the Forex market, you need to study and learn to rely on candlestick patterns.

On the other hand, some new traders come to think of indicators as being their only way of finding good trades. However, keep in mind that indicators are only helping tools. In fact, many professional traders in Hong Kong prefer to trade using lower time frame data only.

But as a new trader, you should start by using a demo account so you can learn to trade. Then trade with the major trend, and focus on the trending market.

Analyze Market News to Learn About the Trend

Every serious trader must learn to conduct fundamental analysis. Otherwise, you will never become a successful trader.

On the other hand, traders who trade with the market trend sometimes think technical data will be enough to secure their profit for the entire month. That’s just unrealistic. This is because high-impact news can have a major effect on the market and its trends.

In fact, even the long-term market trend can change because of the news. Therefore, if you fail to learn fundamental analysis, you might never find good trades. Always remember that trading is all about finding the very best trades. So learn about how the news affects market trends so that you can assess the strength of a particular trend.

Limit Your Exposure to Risk

A trend trading strategy is a profitable way to trade the market. However, even experienced traders know never to risk a large amount of money. In contrast, novice traders sometimes risk more than 10% of their account balance in an effort to secure a big profit. While sometimes they might win in this way, they’re more likely trashing their long-term trading career.

So always remember that the outcome of any single trade is completely random. And you can’t make a profit in the long run unless you know the proper way to manage your risk factors. You might have a large amount of money in your trading account, but there is no guarantee you will win all your trades. So never trade with money you can’t afford to lose.

Learn to Trade the Trend to Win in the Long Term

We have shared with you here the four golden rules for trading the market trend. Learning to follow these rules when you’re first starting out as a trader might seem difficult. However, once you begin seeing the results of trading the market with proper discipline, you will understand the importance of trading with the trend.