Yohanes Gagahlin offers the following royalty-free article for you to publish online or in print. Feel free to use this article in your newsletter, website, ezine, blog, or forum. ----------- PUBLICATION GUIDELINES - You have permission to publish this article for free providing the "About the Author" box is included in its entirety. - Do not post/reprint this article in any site or publication that contains hate, violence, porn, warez, or supports illegal activity. - Do not use this article in violation of the US CAN-SPAM Act. If sent by email, this article must be delivered to opt-in subscribers only. - If you publish this article in a format that supports linking, please ensure that all URLs and email addresses are active links. - Please send a copy of the publication, or an email indicating the URL to [email protected] - Article Marketer (www.ArticleMarketer.com) has distributed this article on behalf of the author. Article Marketer does not own this article, please respect the author's copyright and publication guidelines. If you do not agree to these terms, please do not use this article. ----------- Article Title: Is Your Forex Trend Following Trading System a Profitable Business? Author: Yohanes Gagahlin Category: Word Count: 600 Keywords: trend following, trend trading, forex trading system, forex ea, forex software Author's Email Address: [email protected] Article Source: http://www.articlemarketer.com ------------------ ARTICLE START ------------------
Trend following is a forex strategy that tries to take advantage of long-term moves. The system aims to work on the market trend mechanism and take benefit from both sides of the market enjoying the profits from the ups and downs of the market. The method of trend following goes against the old philosophy of buy low and sell high. It takes advantage of the market whether the current trend is up or down. Traders using the Trend Following method begin trading after a trend is established. Other traders attempt to envision what the market will do, trend followers wait for the market to do it. The volatility of the currency market is the first determining factors in which currency to trade. The single most important indicator for a Trend Following supporter is price. He may take other considerations into account, but price is the ruling factor. The timing of the trade is the second vital factor, while it is less critical than the amount of the trade. Before the trader buys, he has got an exit strategy in place , knowing when he is going to sell whether the trade is rewarding or not. Traders who use this approach can use current market price calculation and indicators like moving averages to determine the general direction of the market and to generate trade signals. Traders who use a trend following strategy do not aim to forecast or predict markets or price levels; they simply jump on the trend and ride it. These systems traders normally enter in the market after the trend properly establishes itself and for this reason, they ignore the initial turning point profit. Dennis and Donchian are often considered the fathers of trend following. This trading method involves a risk management component that uses three elements; the currency market price, equity level in an account and currency market volatility. An initial risk rule determines position size at time of entry. Exactly how much to buy or sell is based on the size of the trading account and the volatility of the market. Changes in price may lead to a gradual reduction or increase of the initial trade. On the other hand, adverse price movements may lead to an exit for the entire trade. An example of a trend following trading system using Moving Average indicators is : * Trading approach: long and short alternatively. * Entrance: When the 50 period Simple moving average(SMA) crosses over the 100 period SMA. The crossover suggests that the trend has recently turned up. * Exit: Exit long and go short the next day when 100 period SMA crosses over 50 period SMA. The crossover suggests that the trend has turned down. * Stop loss: If the recent, say 10 day, Average True Range is 0.5%, stop loss could be set at 4x0.5% = 2%. A good Trend Following need to have methodology on: * How and when to enter the market. * How many lot-size to trade at any time. * How much money to risk on each trade. * How to exit the trade if it becomes unprofitable. * How to exit the trade if it becomes profitable. A winning trend following trading strategy is using price trends, correct trend indicators, taking small losses and diversifying it. Another good approach is having a proven and completely automated trading system that makes money on both bull and bear markets. Even when the markets are going down a good automated trading system is making money. This is because it is designed to identify trends in the markets in both up and down directions and send the trading signals at the beginning and the end of each market trend. Yohanes R. Gagahlin is a Certified Trading Advisitor/Money Manager and Expert Advisor Developer. Forex Bling trading system from http://www.ForexBling.com offers the finest forex trend following expert advisor to win the market in any condition. ------------------ ARTICLE END ------------------ [Non-text portions of this message have been removed]
