Why the Trend Really is Your Friend

Filed under: Learn Forex Trading |

If you have been trading for any length of time, or even if you have only just started looking into trading, you have no doubt heard of the expression, “The trend is your friend”. There is a lot of wisdom to be gained from this simple little saying, particularly for beginners.

 

You could think of a trend as you would the tide in the sea. If you swim against a strong tide, it is very difficult to make any headway and you could soon find yourself back where you started. But if you swim with the tide, things are much easier and more enjoyable. And this is the way it is with trading forex.

 

If you try to trade again the trend, which is sometimes called contrarian trading, you have to have a very high probability setup in order to have a chance of success. However, if you trade with trend and ride it to a new high, you have a much better chance of being profitable. However, no trend moves in a straight line, and it periodically rotates slightly lower (or higher, as the case may be with shorts), before continuing. And this is where you can hop on, when it rotates and forms a price action signal at a level of support/resistance. These kinds of trades are very high probability setups, and if your target is at least two times what you are risking, then you have a very good chance of being profitable in the long term.

 

So in summary, money can be made by trading against the trend if you are skilled, but for beginners, it is much easier to trade with the trend. By always trading in the direction of the trend, you add another level of confluence which makes your chances of success just that little bit higher.


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