The Trend is Your Friend – Learn How That Works

Oct 15, 2020 1:24 PM ET

Oct 15, 2020 9:24 AM ET
iCrowd Newswire – Oct 15, 2020

The Trend is Your Friend – sounds good, correct? Every financial trader should have heard of this very famous locution. It really means that following Forex market trends is the only and most profitable method to make money from trading. Almost all professional, experienced traders/investors use the trends, and that’s why we should trade like them.

Today, in this article, we would like to show you a very simple but effective strategy, based on the trend-following theory. It is called “ The Trend is Your Friend”.

A trend can be defined as “a general direction in which something is moving or developing”. Within the world of finance, stock prices tend to move in one of three general trends over a defined period of time: up, down, or sideways. While a stock price never goes straight up or straight down, it is common to see a general direction emerge over a given period of time.

Perhaps you will be surprised at what we will say now, but this strategy is absolutely simple, which is based on highly accurate price action. Besides, you don’t need to combine it with any indicators, because the strategy itself is an all-embracing trading system.
Every time you look at a trend, have you ever asked what would happen to prices for the foreseeable future? Sure you did. And normally, prices will move towards the direction of the trend. That’s further expressed when the last swing is broken because it presents that the trend’s momentum is still strong. So, all you have to do when using this strategy is to detect swing points in a spotted trend and enter the market following the trend when those thresholds are pierced. So simple, right? But it’s highly effective.
Testing this strategy for 12 months, we have so far confirmed a very good result: +3500 pips with the win-rate affirmed at 86.44%. The good news is this strategy could be used in any trading time frame and on any financial assets. Sometimes, false penetrations can appear; in order to reduce them, you should use candlestick trading knowledge alongside.

Let’s review some examples to understand more about this powerful technical strategy.

As we have said, you needn’t combine the strategy with any indicators. Just open up the trading chart, choose your favorite trading time frame, and start identifying signals.

A bullish opportunity is ascertained when the following requirements are met:

  • Prices are trending upwards;
  • The last swing high is broken with strong bullish momentum.

On the contrary, a bearish occasion is determined when the following conditions are satisfied:

  • Prices are trending downwards;
  • The last swing low is penetrated with strong bearish momentum.

Below are some important terms when trading with this strategy:/[b]

  • Only one position should be entered at a time;
  • The pump candle must be fully close before a trading opportunity is affirmed valid;
  • The stop-loss should be placed just above/below the last swing low/high, while the take profit could be left open. You can gradually trail the stop loss if prices trade towards your expected direction in a bid to maximize the profits.

If you like this strategy, you might also be interested in this Donchian Channel

Advantages:

  • All-purpose, simple, and easy-to-use;
  • Generates highly accurate signals;
  • Allows traders to benefit from long trends;
  • Requires no additional indicators.

Disadvantages:

  • Requires a high level of patience;
  • Necessitates traders to monitor the trading platform.

Chasing market trends is a highly gainful trading method, especially for Forex traders as it allows us to collect huge profits from trending movements. If you are a fan of trend-following strategies and like the simplicity, you shouldn’t ignore the Trend Your Friend strategy as it is really one of the most profitable trading strategies that we have ever tested. However, never forget to use risk controlling and psychology managing methods since there are no perfect trading systems that can guarantee a 100% profitability.


iCrowdNewswire