As with all traders such as stocks, Forex, and cryptocurrencies, the biggest secret to getting a total plus is how you can compete in a winning market. I think there are various trading styles, but this time I’m writing an article about how to find a winning market for trend followers who can make a certain amount of monthly total plus. Trend followers are required to understand the overall direction and compete. It will be essential to fight in a market where the overall direction is clearly visible.
It is a prerequisite for trend followers to check the direction of daily and weekly bars. If the overall direction is not decided, you will not be able to enter because you cannot tell whether it is above or below. First of all, when you wake up in the morning, it is important to make time to decide the direction and strategy of the market. If you trade vaguely somehow, you will not be able to catch the trend in most cases. Of course, you should check the latest political and economic indicators and enter while predicting the market movements of today and tomorrow.
The market that is expected to be a tough battle for trend followers is the range market. If you don’t know whether it’s up or down, you can hardly make a profit or it will be a total minus when you have a vague price movement. How to avoid such a market is important. Or you have the option of not trading. This is because in the range market, even if it goes forward, it will return, so thin profits or loss cuts will be repeated.
Does not depend on one market price
Personally, I recommend that you do not stick to just one market. The market is not always full of trends. At one point, the volume of transactions may increase and become full of trends, or it may not move at all and the range may be repeated for months. It is fatal for a trend follower to have no trend. If there is no trend, it is one of the important strategies not to trade away from that market or to choose another market. Finding a winning market is the biggest secret to keeping a total plus.
Specifically, what kind of market is difficult for trend followers to win? The chart below is taken as an example. The chart below is the daily chart of EUR / JPY as of the end of January 2022. The chart for the last 1-2 weeks is a beautiful downtrend, but before that it has a very dirty shape. One day it is upwards, the next day it is upwards, the next is upwards, and so on, it becomes difficult for trend followers to understand the overall direction.
For example, if you are particular about the yen exchange rate, moving to another exchange rate such as USD / JPY, GBP / JPY, AUD / JPY, CAD.JPY is one option. You don’t have to force yourself to fight in an uncertain market. If you force yourself to fight, you will only lose your principal.
The following is an example of a market that is easy for trend followers to win. The chart below is taken as an example. The chart below is the daily bar of GBP / JPY as of the end of January 2022. Unlike EUR / JPY, it is a clear move. The timing of the trend change is argued every time the day changes between upward and downward, but at other times it is easy to compete because there is always a clear direction. If the overall direction is down, you can raise it temporarily, but if you make a sell entry, it will drop down in most cases, so you can continue to make a total plus. The only time you can’t win is the timing of the trend change. Since buying and selling are confused, it is difficult to know the direction, but there are also times when we dare not trade at that time. Alternatively, contrarian is also an effective strategy.
Trend followers should not focus on currency pairs, but on how to find and fight a market with a clear direction. Even if you repeat the loss cut, if you catch one big trend, you will get a big profit, so the total will definitely be positive. This story applies not only to Forex, but also to cryptocurrencies and stocks. The most important thing for trend followers is how big the flow can be.