The majority of experienced traders, mentors, and educators in the forex market would tell you to start forex rating by looking for FX rates trends. In other words, new forex traders are almost always told by experts to start with trend trading before thinking of any other type of strategies.
It is likely that you have also received this advice. Have you ever wondered why trend trading is so highly recommended for novice forex traders? The answer is that trend trading is ideally suited to new traders. Here are some of the benefits that you will reap by choosing to trade on the basis of what trends you see with FX rates.
The Analytical Process Is Simpler
The best part of using trends to trade in the market is that you would not have to learn complicated concepts to analyse the market. In fact, analysing FX rates with the objective of finding trends is quite easy provided you have studied hard and know the basic setups that you are aiming for.
Trend Based Opportunities Are Easier To Spot
Not only is the analytical process easy but the trends themselves are particularly easy to spot on forex charts. Unless you have overcomplicated the entire process for yourself, a single glance or two should be enough to pinpoint a trend that has potential. Following this, you can go about picking the details of the FX rates trend and see how you should try to profit from it.
Fundamentals Can Be Incorporated
Another plus point for trend trading is that you would be able to incorporate fundamental concepts into your strategy. What this means is that trends typically discount all other factors of the market which means that you do not have to focus on them.
However, trend trading is not recommended at the time of forex news releases but if you can learn how to read the impact of these releases then you can actually incorporate fundamentals for even greater profits from FX rates volatility.
Trades Can Be Held Longer With The Trend
If you are trading with the FX rates trend then you can hold trades for a much longer period than if you were trading against the trend. Needless to say, the longer you hold trades in the market the better your profit potential with trend trading.
Profits Are More Certain If You Move With The Trends
Trends usually have very strong fundamental drivers behind them. This means that major trends tend to be very strong in the forex market which means that the upward movement of FX rates is stable. What this means is that when you trade with trends then your profits will be more certain than in other situations.
Trend Trading Is Safer
In the forex world, the saying trend is your friend is very common. This saying is famous because it encapsulates a very crucial aspect of FX rates trend trading i.e. it is low on risk and fairly safe as long as the strategy and trading plans are followed.