There are trend trading tenets that are not understood by many forex traders

Successful trend trading with any technical indicator is predicated upon the trader understanding certain key factors about this forex trading strategy. These factors include:

1. Trend traders will never successfully call the tops and bottoms of trends, and will therefore lose some pips at the beginning and end of a price movement. It’s astonishing how many forex traders never learn this single, most important tenet of trend trading. But then, it’s also astonishing how very few forex traders are successful in the long term.

The success and profits to be found in trend trading don’t lie with entering the market at the very start of a movement and exiting at the very end. It lies with grabbing the middle of the movement, after the trend is confirmed and before it’s broken. By being satisfied taking their profits from the price movement’s centre, successful trend traders reduce their odds of being faked out by the forex trading market.

Dean Malone, a successful technical institutional trader and a fine teacher, has said that there is room in the forex trading market for both bears and bulls, but there’s no room for a pig. A pig who can only be satisfied with capturing the entire move, rather than merely a chunk of it, is a forex trader who will be fried by the market sooner or later. It’s only a matter of time.

2. Trend traders always trade with the trend. They don’t attempt to countertrade pullbacks or retracements, instead riding them out with the understanding that, if their trading signal is broken, it’s time to exit the market. Countertrading retracements, even with mini-lots, is another example of a forex trading pig who’s going to be fried by the market at some point.

3. Trend traders are in for the long haul, ignoring short-term volatility. They enter the forex trading market only after the trend is confirmed and ride the movement until it wanes and their trading signal is broken, exiting the market at that point. Pullbacks and retracements are generally considered unimportant, merely a sign of the trend’s maturation process.

4. Forex traders who find themselves unable to utterly ignore the short-term volatility should consider trading, not a single full-size currency lot, but an equivalent amount of mini-lots. Should a retracement threaten their open position, these traders can then partially exit the trade, removing some of their profit from the market while allowing the remainder of the mini-lots to continue. If the trend resumes, they can re-enter the market with more mini-lots, buying on the dip or shorting on the hop.

Remember, it’s never a wrong move to take some of the profit off the table while the trade is winning. In the forex trading market, profit is never wrong.