iCharts Discussions

[adamsmiths]

When we first start trading the financial instrument in the global market we were taught about the trend line, support and resistance level. Over the period of time, the retail traders get deviated from the very basic and essential elements that are trend line, support and resistance level. They start using too many complex system and strategy to make the profit from the forex market. But in reality the more simple system you will follow the better profit you will get in trading. As the old proverb goes “Trend is your friend” in the forex market is a very vital statement. If you even know how to trade the trend line in the market perfectly then you will be able to make tons of money just by trading the financial instrument in the world. But sadly most of the retail traders in the forex market don’t know how to trade the trend line properly. In this article, we will discuss how to execute high-quality trades in the market just by using the trend line.

Draw the trend line perfectly: Most of the retail traders in the financial market fails to make money by using the trend line trading strategy due to their lack of knowledge. To be honest they don’t know how to draw the perfect trend line in the market and the characteristics of the good trend line. If you look at the professional traders involved in trading CFDs than you will see most of them trade different assets in the financial market just by using the simple trend line. This simple tool is extremely powerful and profitable if you know how to use it. In order to draw a valid trend line in the market make sure that you have at least three connecting points. Many novice traders often draw a trend line just by tow higher lows or lower highs in the market. But this, not the appropriate method since it requires three connecting points to draw a valid trend line. And don’t trade the trend line which is too steep since most of the time such type of trend line fails to hold the price in favor of the long-term prevailing trend. An ideal trend line should be around 45 degree and traders should be able to make a decent amount of profit by using the support or resistance level of the trend line.

Use price action confirmation signal: The financial market is high liquidity market and due to the advancement of technology trading CFDs has been a lot easier in today’s days. Most of the reputed brokers are giving tight spread and high-quality trading platform to the traders along with advanced charting tools to trade the live assets in the market. All the professional traders use price action confirmation signal to trade the trend line in the market. For the bullish setup, the wait for the price to hit the trend line support zone and once the condition is full filed they wait for bullish price action confirmation signal. They simply use the price action confirmation candles stick to set their potential stop loss zone in the market and rides the trend. There are some advanced trend traders in the market who often uses the trailing stop loss features to maximize the potential profit by trading the trend line in the market. By using the features you will be able to book certain portion of profit in the market and maximize your profit in the market with zero risk exposure.

Trends are not absolute: Most of the novice traders in the financial market thinks that the trend will remain forever in the market. But nothing is absolute in the financial market. There will change in the trend and the price will move up and down in a repeated manner. If a trend line support or resistance gets broken then don’t execute any more trade in the market since the trend is about to change. The professional traders wait for confirmation signal both technically and fundamentally while trading CFDs in the financial market. So as a trader you should learn how to identify the trend reversal in the market. Most of the term long term prevailing trend in the market gets changed during the event of the high impact news release so if the trend line gets broken on such event then chances are very high that imminent trend reversal is going to take place in the market.
In summary, Trend line trading is very much popular among the professional traders due to its simplicity and reliability. If you want to trade the trend line perfectly than make sure that you draw them perfectly in your chart. Use the higher time frame to draw the trend line since increases the reliability of the trend line. Learn the art of price action and use price action confirmation signal to trade the trend line support and resistance zone. Always remember that no trend is absolute in the market since it the nature of the market to change its trend. So if you see a broken trend line then wait then consider it as a trend reversal.