Forex Trading- Money Management Rules

watch the Trend- 3 Rules to Make serious profit

Most beginner traders don't bother trying to trend following forex longer term - instead they try forex scalping or day dealing. These methods focus the trader on small moves and they hope to catch small gains however as most short term moves are random, this leads to equity eliminate.

The other picks are swing dealing and long-term term forex trend following and this article is all about the latter method. If you look at any forex chart, you will see long-term term trends that last for months or years. These moves can and do yield serious profit - present we will outline a simple method to catch them.

Looking for Breakouts

By far the greatest way of catching the serious moves is to use a forex trading strategy based around breakouts. A breakout is simply a move on a forex chart where a new high or low is made and resistance or support is ruined.

New High and Lows

While it might appear that you are not buying or selling at the greatest level, you are in terms of the odds of the trend continuing. Most forex traders make the mistake of waiting for the breakout to come back and get in at a better price but these traders never get on board. The grounds for this is if a breakout occurs, then you have a new strong trend and a pullback is not very likely to occur.

Most traders don't buy or sell breakouts and that's exactly why it's such a important method.

The only point to keep in mind is a support or resistance which is ruined, should be valid and that means at least 3 points in at least 2 different times frames. The more tests and the wider the spacing between the tests the more valid the level is.

Confirmation- Make sure you confirm before the trade

Of course not all breakout keeps and some reverse, these are false and can cause losses. You therefore need to confirm each move. All you need to do to achieve this is to put a few momentum indicators in your forex trading system to confirm your dealing signal.

These indicators give you an estimation of the strength and velocity of price and there are many to choose from. We don't have time to discuss them present (simply look up our other articles) but two of the greatest are - the stochastic and Relative Strength Index RSI

STOPS AND  YOUR TARGETS

Stop levels are easy with breakouts - Simply behind the breakout point.

If you have a huge trend then you need to be careful you can milk it, so don't move your stop to soon and keep it outside of normal volatility. If it is a huge move, trailing stops should be held a long-term way back and the 40 day moving average is a good level to use.

You have to keep in mind that when the trend does eventually turn you are going to give some profit back. You don't know when the trend is going to end, so don't predict.



The above is a simple way to trend observe forex and catch the high odds moves that yield the serious profit. If you are learning forex trading and want a simple method that is robust and will help you catch every superior move, then you should base your dealing on the above method.

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