Trade Forex Trends. One of the easiest ways to make money through trading is by trading in Forex trends. Of course you have read me a few times to talk about my taste for looking for trend changes, because they tend to be very profitable. I like to trade reversals, but you also have to learn that trading reversals can be done profitably, when you are trading on the major trend. Both ways of approaching the market are valid, but when looking for a reversal, in favor of the major trend, usually have greater chances of success. Recently I received an email from a reader, with a question that I consider basic to understand the Trading. Which time frame is the right one? When we observe a quotation, the price that is forming in the graph exists in several different temporal planes. There are monthly, weekly, daily, 4 hour, 1 hour, 15 minute, 60 second charts.
A trend of sixty seconds does not have any importance or its incidence is minimal in a monthly chart. In this case, if we operate in graphs of 1 minute, the weekly graph would not be useful to us to take any decision of investment. The comment helps you to understand that everything is part of the same, the price of the pair you are trading and analyzing. In order to be successful with the reversals in favor of the trend, we will have to observe the following steps:
Trade trends in Forex, identifying the main trend
This is one of the biggest mistakes traders start, not correctly identifying the main trend. The main trend should be identified in a chart higher than the one we trade. If we are trading on 15-minute or 1-hour charts, the main trend we care about is the 4-hour trend. We can use a variety of technical tools to mark the main trend, I stay with the simplest and traders have been using since the charts were made by hand: channels, trend lines and moving averages.
Identify movements against the main trend
Once we have the main trend, we are going to identify possible points at which to incorporate ourselves into the main trend.
Forex Shoulder Head Shoulder Trading
The Shoulder Head Shoulder is one of the most powerful terminal guidelines that we can find in technical analysis, and we must know how to identify it properly, in order to take advantage of its full potential. This type of technical figures are characteristic of chartism, and therefore of price action. All the technical figures have a certain degree of reliability, in fact some time ago I wrote an article titled: To operate with failures of technical patterns. All the patterns can fail, although the most habitual and that better results offers, precisely is the failure of a Shoulder Head Shoulder, since to the being a terminal pattern that supposedly we will find it at the end of an upward trend, it would be a detonator to return to enter again long to the market. Personally I like to operate the trend turns and I am very attentive to these patterns of change, such as double or triple ceilings or floors, along with rounded patterns, cup with handle and of course HCH.