FOREX TRADING STRATEGIES
I believe that this is one of the most important and mind buggling question that most traders face.
Forex trading strategies Example: Forex Pair Eur Chf
In the forex pair above, the overall trend is in a downtrend (marked by the red line)
But in the current movement it is in a short term uptrend (marked by the yellow circle)
So to say if you are in the current situation – which happens all the time.
Forex Trading Strategies -> How would you trade?
Forex Trading Strategies -> Would you trade up or down?
Forex Trading Strategies -> Would you trade with the main down trend or the short term up trend?
Forex Trading Strategies: Which trend should I look? The long term or short term?
Generally speaking, of course the bigger trend holds more weight right?
So should you still trade down?.. Not really..
Although it is the bigger trend that holds more weight, it is the short term current trend that depicts it’s movement.
The main question lies in what kind of trader are you.
- If you are the type who wants to trail for the long run. Then you should wait for the trend to turn back down and then trade down.
- If you are like me, who takes profits off the table with a reasonable risk reward ratio. Then we will trade the current short term trend.
Forex Trading Strategies: Which trend should I look? The long term or short term?
You see, although the long term is down. But you should NEVER trade against the current short term trend.
Because this short term may turn to a bigger trend. And this short term trend may be the indication of a trend reversal.
So, if you have a good profit taking strategy. The answer will be to trade the short term trend and not the long term trend.
But of course, the best scenario is that we have the long term and the short term trend in the same direction.
It happens, but it does not happen all the time.
So in scenarios like the above chart example. I hope you have gotten your answer!
I hope you have gain something from this quick forex trading strategies trade example.
If you find this post interesting, do comment on it!
Ezekiel Chew
Asia's #1 Forex Mentor