The market is still moving around today, but this time it’s an article for trend-following traders. Trend-following is a tactic that catches a big flow of ups and downs, catches a big price range, and makes a big profit. Therefore, those who fight with a trend-following strategy depend on how to find a market with a big trend. Conversely, if a trend does not occur, you cannot win with a trend-following strategy. Today’s article is about what to do if you can’t win.
What to do if you can’t win
What should I do when I can’t win even if I’m fighting with a trend-following strategy? There are two. One is to temporarily quit trading. The second is to trade at another market. This idea is a method that can be used for stocks, Forex, and virtual currencies, and it is also an effective prescription to protect your own funds. Even if you forcibly fight in a market where there is no trend, you will not be able to make a profit. On the contrary, it can be a wasteful stop-loss pile, resulting in increased losses. Specific measures for the two countermeasures are presented below.
Temporarily stop trading
This is for those who only want to fight in one market. If you are very particular about it and want to fight with only one market, we recommend you to leave the market and quit trading. No matter what the market price, there can never be a trend all year round. There will always be a time when you will be quiet and there will be little movement. Even if you force yourself to fight at that time, you cannot win. The best way to do this is to force yourself to fight and reduce your money. If so, it is best to stop trading once.
Trade at another market
If you can consider fighting in another market, find another market. There is no trend in minor currencies, so it is a condition to look for the market price of major currencies. What is the market price that cannot be won? The following is a typical example. The chart below shows the daily AUD / JPY as of February 2022. Notice the location surrounded by the most recent blue frame. A chart that goes up one day but goes down the next day is exactly the hellish market for trend followers. It is easy to get this shape when it is time to change the trend, but it is a very difficult market to win because there are many days of rubbing and the price range does not fluctuate so much, and it has been rubbing for a long period of time. If you get into such a market, you will not be able to make a profit all the time, but you will end up with a bad stop-loss, and your loss will increase. Let’s change the market price instead of forcibly fighting.
A market that is easy to win is a market that has a clear direction. For example, the chart below. This is a GBP / USD chart as of February 2022. After going up, it drops cleanly down, and the price range is wide, so it is very easy to win. Trend followers need to find such a winning market. Even if you look at it on a daily basis, it is easy to win if the same direction continues for many days in a row. The most important point when trading is how to find a market that is easy to win. The most important thing is not how difficult the market is to win, but how easy it is to win.