Let's start this post with the important difference between a trader and investor,
Investors are people who put their money and capital into a market such as stocks or real estate, under the assumption that the value will always increase over time.
And a trader is a person who has a defined plan of strategy to put capital into a market to achieve a single goal: Profit.
Traders don’t care what they own or what they sell or buy as long as they end up with more money than they started wit. They are not investing in anything. They are trading. It is a critical distinction.
"At PipsMatter, we are traders, and our one goal is PROFIT and the best way to achieve profit is specific education."
Since this post is about trend trading, lets go over 2 important points.
1. Be just as willing to buy long as you are to sell short. Let the objective be to be with the trend and make money, not be right.
2. One of the main rules that profitable Trend Traders follow is to cut their losses short. We don't get attached to a particular trade and hope that it'll turn around for us.
The simple trick is this… decide how much you are willing to loose on each trade and stick to it. (Have specific, PREDETERMINED exit areas and have your stops ready to take you out)
The Best Way to Use STOP LOSSES
Since risk management is one of the most important factors of successful trading, we do need to go over it before I need to go over it before we proceed into anything else.
Stop losses are your best friend in trading, full stop.
Now, here is the best way I use to set my stop losses.
First determine where the stop will be. By this I mean, add the SL to an area of the market that if reached, will prove that you are wrong on the trade idea.
Then use your Risk Management Calculator (if you want one, just send me an email) to determine the size of your trade based on the SL area.
Once all this is done, you open your position and add a stop loss and NEVER move or remove it.
This is a basic processes which has helped me a million times so far... and whenever I didn't follow this process, I usually lost.
Now, remember this, and try to remember it forever: It's not how much money you make, its how much you KEEP that matters.
How much of the money you keep at the end of the month, the quarter and the year.
What is a trend?
There is no better way to show you this than a picture...
The most common explanation of a trend is, for an uptrend: higher highs and higher lows. And for a down trend: lower lows and lower highs. (as you can see in the image above.
Usually price action will use a "swing area" to move higher/lower. i.e. as a support, for an uptrend and a resistance for a down trend.
Check out this recent movement on EURUSD.
(click on image to enlarge)
As you can see in the above image, this down trend has given us plenty of opportunities to sell EURUSD every time it reversed to a support area. This is a pretty smart way to trade, its basic price action.
While we are speaking about price action, on the 5th of July 2018 I will host a "mini-course" in which I will teach a powerful (an easy to apply) price action strategy, a trading routine which requires no more than 30 mins of charting/trading a day and a bulletproof risk management practice. So if you want to learn more, make sure you join this course!
You can learn more about it, or reserve your seat by clicking here.
Keep things to remember/know:
- Support Resistance Areas: Once you clarify you are in an up or down trend, then you can use the key trading levels to buy or sell.
- Trend Reversals: Most of the time when the trend changes price action creates patterns (head and shoulders, double/triple tops/bottoms etc), so you should stop the changes easily, which will allow you to strike bigger profits
In the coming weeks I will host another mini-course, this time it will be specifically directed to trend trading, if you want to attend it make sure you subscribe to our mailing program, you can find the Subscribe Box on the front page, all the way at the bottom.
The best thing you can do to learn more about all of this is to register to my course as I don't have much more to add to this post, as the subject of trend trading is rather large, but I do promise to give you a comprehensive guide in my next course!
Thats all I have for today! Happy trading guys and girls and remember to always protect yourself! Trading is a dangeorus game!