Simple ways to create a trend trading plan, it might seem difficult for new traders who learn Forex for the first time to finalize strategy of a trend trading in the Forex market. But, the good news is that the majority of trend based strategies are possible to be divided into three components. In this article, we are going to learn the fundamental of a trading market strategy through those three components.

The 3 Simple Ways to a Forex Trend Trading

It’s no doubt that we need to have good strategy to enter the Forex market if we don’t want to fail and lose our funds in the market. When there are many strategies that can be utilized, trend based strategy can be a good choice. If you are interested to learn how to create strategy for this Forex trend trading, check the steps as follow.

Step 1: Find the Trend

The first step to trade based on trend is to discover the trend itself! There will be a lot of ways to classify a currency pair trend in the market. However, one of the least difficult ways is by recognizing if the price is developing higher low or higher high. When the price is stepping upwards, it means that the price is creating higher highs. 

On the other hand, if you find that the price is going down toward the lower lows, it suggests that the price is potentially turning down in a downtrend. At this point, as a trader you need to search for chances to purchase the currency pair in its current uptrend. Take your time to study the chart of currency pair that you are trading on.

Step 2: Plan an Entry

Once you can find a trend, you are able to select from a range of strategies to enter the market. At this point, one of the easiest tactics to enter the market is by using a breakout. Considering the uptrend definition is a creation of higher lows and higher highs, you should plant to jump into the market when the trend keeps on.

When you are using this strategy, you can place a trade entry above the value. So, when the even price breaks above the set value, you will be leaded to the market right away. There are two advantages of utilizing an entry order. One of the advantages is you don’t need to stay in front of your PC to enter a position in the market.

Step 3: Manage Exits

When you start trading in the market, it is always possible to lose money. As a result, when you are trading trends, it is essential to remember that they will sooner or later come to an end. That’s why a trader needs to place stop in their trading chart. At this point, you can employ a stop order to make you automatically exit a position.

Keep in mind that understanding where to gain profit is another significant component of any trend trading plan. You need to avoid a mistake of looking to gain more profit without considering the risk if the trade moves against you. Remember that you might not need to hold for a position a long time since there is a time when it may go against you.

The Bottom Line 

In conclusion, there are three simple steps that you can follow to create trend-based trading plan. In addition to this approach, there are actually some other ways that you can try as well if you are still trying to find the best strategy that works for you. That’s why it is significant to learn Forex even when you have traded in the market for awhile.