There is a well-known proverb in the forex industry that the trend is your friend. All the professional traders always execute their orders in the market in favor of the long-term prevailing trend. On the contrary, the novice traders tend to pick the tops and bottoms of the currency pairs in the market and thus incur a heavy loss. If you truly want to become a professional trader in the financial market then it’s highly imperative that you trade in favor of the long-term prevailing trend in the market. If you look at the success rate in the forex industry then you will notice that many new traders in the forex market often fails to achieve success even though they are trading in favor of the long-term prevailing trend. In this article, we will discuss the most common mistakes that every trader makes in trend line trading.
Faulty trend line: There are many traders in the world who are saying that they are executing their trades in the trend line but all of their trades are hitting the stop loss. So what possible went wrong with them. The answer is simple. They are drawing the faulty trend line in the market. If you look at the professional trader who is trading forex option then you will see that every single one of them in the market draws the trend line with the extreme level of precision. In order to draw a valid trend line in the market you need at least three connecting points and you need to make sure that you do not force joining the points. Most of the novice traders in the forex market force joint the three points and thus incur financial loss while trading the live assist in the market. But if you know how to draw the perfect trend line in the market then you will see that most of the trades that you execute in the trend line are hitting your potential take profit level in the market.
Use price action signal: Price action trading strategy is considered to be most profitable and reliable trading strategy in the world. All the professional traders who are trading forex option are currently using price action trading strategy due to its extreme level of profitability. So if you have a valid trend line in the market then waiting patiently for the price to retrace back to the existing trend line in the market. Once the market hit the trend line support or resistance level don’t execute the orders in the market rather wait for price action confirmation signal. If you can trade the market with price action confirmation signal then within a very short period of time you will see that most of the trades that you execute in the market are closing with profit.
Higher time frame trading: Trading the higher time frame has an enormous advantage. All the professional are trading forex option in the higher time frame since it greatly reduces the false signals in the market. Most of the novice trader in the financial market are having trouble to execute high-quality trades with the trend line trading strategy since they are using the lower time frame to draw the trend line in the market. So when you draw the trend line in the market make sure that you use the daily chart or the weekly chart. It’s true that in order to trade the daily and weekly chart you will need to wait for a long time but if you truly want to become a successful trader then it’s a must for you. By trading the higher time frame in the market you also develop a great level of precision to trade the live assets in the global market.
Summary: Forex trading is not a get rich quick scheme rather it is one of the smartest business in the world. If you are relatively new in forex trading then it’s highly imperative that you trade the market in favor of the long-term prevailing trend since it will greatly reduce the risk exposure in the market. But make sure that you draw the trend line perfectly in the market since a faulty trend line will cause you financial losses in the market. Last but not the least always follow proper risk management factors before executing any orders in the market.