To start trading we need to meet 3 basic requirements; Have the capital to invest (obviously), a mindset under control and a trading plan that will tell us if we are swing traders or trend followers. The style of trading that we are going to use will depend on our abilities to analyze the market and our objective as a trader.
Swing traders are known to trade in a short to medium term timeframe if opportunities arise to position a long or short order on any pair, while trend traders should analyze the market to detect the construction of a solid trend and take advantage of price variations when they form upward or downward.
In this opportunity, we are going to discuss 3 reasons why you should trade with the trend that is forming in your trading time.
Considering that the trend followers decide to make an investment that will be remunerated over several days, weeks and even months, the market analysis will be based on careful monitoring until the moment of positioning your order. Once you enter the market (regardless of whether you do it with a market or limit order) the price will continue and you can calmly wait for your target to be reached.
Unlike swing trading, trend following will not require you to be on the market looking for new opportunities, instead you will have the job of identifying a clear trend forming and entering when the time is right. Since trend followers handle risk management a little differently than swing traders, you will not have to worry about the status of your stop loss every 20 minutes, although it is always recommended to check your order daily.
Unlike other markets such as crypto, the Forex market has constant and enormous levels of liquidity that are born from trillions of dollars that enter daily, so the trends (bullish or bearish) are built under solid foundations that are maintained at over days weeks (sometimes even months). Placing a long order at the start of a prolonged uptrend could give us a higher profit than we would get from trying to get a piece of the market in short-term and volatile movements.
In addition, our market analysis will determine when a trend is about to end, where moving averages and gases that form in the market play a very important role, which may be indicative of a start/change in trend.
Since the volume in Forex is so high (especially at the time of opening of each market), the trends that start manage to stay through a certain period of time, thus keeping us constantly in profit and observing price patterns throughout of a trend path.
A trend follower is more likely to get a good rate of profit than a swing trader, although both styles of trading can be highly beneficial. However, becoming good as a swing trader requires an abysmal amount of learning that you will only get by making mistakes and losing money (whether real or virtual). Remember that this trading mode is based on taking advantage of bearish/bullish movements and also retracements, which we must determine at an exact price to be able to place an order.
Trend followers only have to focus on one thing and that is recognizing the patterns necessary to determine the start of a long bullish or bearish trend and volume will always be a key indicator for them. If the volume undergoes a drastic change, the trend follower will be able to make the decision to collect their profit and cancel the trade or risk holding on a position a little longer.
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