Do you trade trends ? We’re sure most of you do! How can you identify a trend correctly, and how can a newbie figure it out? Let’s discuss.
✔️The main advantage of drawing trendlines is that they make the chart look clearer. To succeed in trading, you must be able to find useful information on the chart, separate it from useless information and project it into the future. A trend line has two characteristics: first, it should have at least two intersections with the price, and second, the line isn’t horizontal.
✔️The more times the price touches the trend line, the stronger the trend. Pay attention to the trend line angle. The trend is too steep and unstable if it’s less than 30 degrees. It’s better when the trend angle exceeds 45 degrees. In other words, the second point through which we draw the trend line should be 20-30 candles away from the first.
✔️As traders often say, the trend is your friend. Buying in an uptrend and selling in a downtrend is called trend trading. The goal is to enter the trend early in order to get the most profit from trading with the trend. What are your steps?
▪️Identify the trend with price action and technical indicators.
▪️Plan your entry: buying on a pullback from support is less risky than buying on a breakout of resistance.
▪️Limit losses: for example, place a stop below the previous higher low.
▪️Define the target: Take Profit must exceed Stop Loss.
❗️Trendlines are one of the most popular technical analysis tools. Don’t neglect this tool in favor of more complex tools, as trend lines can be very useful for your trading. Remember that trading against the trend is riskier and requires professional skills and extensive Forex experience.