If so many traders trade with the trend, why do the majority do the opposite? In my humble opinion, I believe either the majority do not know how to trade with the trend the counter trend is natural for them to trade. Either way, the trend is is more profitable to trade. Let's get it here.
Here is a video breakdown of what will be discussed:
You will also be learning how to:
Remember the Where is Waldo book? This book was based on finding Waldo in a crowd of people and things. I remember, when I found him I felt so accomplished. I know some of you may be wondering what this has to do with Forex? Everything my friend, everything.
If I showed you this picture on any given day would you know what do? Would you know your next move? For some, yes. For most, no. So let's get into it.
First thing first, we must establish trend. Trend is when price is moving in an uptrend or a downtrend. By looking at the picture above, can you identify the trend? Some may say uptrend, some may say downtrend.
Let's zoom in and look to the further right side of the chart. Besides, that's where the trading is going take place.
In the example above from left to right, the market was trending up making daily higher highs and higher lows, putting the market in an uptrend. Next, we can see price reverse. What were the early indications price was getting ready to reverse. 1st is a trend line.
Price broke the trend line and then continued down. A break of a trend line is said to be an early indication that price is getting ready to reverse. As we can see here, the statement appeared to be true. Next, we can see the market break the daily higher low, present a lower low and lower high then continues downward creating a down trend.
See how the picture comes together. Not only have we established trend, but we have created a space for trading opportunities.
On the 4 hour timeframe, we can see price in a more in-depth point of view. The downtrend tends to be more relevant. So, me being the trend trader, I thinking buying in this market is a no go. If you are the countertrend trader, you'd be a danger to yourself, but a cash cow to the big banks. There are more profits to be made trend trading in this scenario than trading against the trend.
Remember Waldo, yeah the lost guy, he is trend in Forex. Let me ask you this, Since looking at the first picture, were you able to find trend for the beginning or did you spot it once the whole picture came together and you weeded out the areas that were not needed?
1. On a naked chart, identify trend
2. Identify market structure rather it be support and resistance , trend lines, or you personal indicator
3. Identify your entry timeframe
Let me ask, do you know how to identify trend?