The trend line trading is one of the most profitable trading strategies and it is designed to trade in favor of the long term prevailing trend. You will notice certain differences in your charts when the trend line takes place such as the bounce off i.e. that the line obeys the trend and when it breaks the breakout strategy is the ideal strategy. In order to find the trend line, you should be able to draw the lines properly and correctly, if so you can forex trade the market. Also, the trend line breakout can be tricky; you should understand the possible ways to the breakout in the trend line. While trading the financial assets make sure to limit your risk by using protective stop loss. In the Forex market each and every single detail or decision should be made with thorough knowledge. Let us learn more about the trend line strategy.
The trend line buying rules
There are many rules when buying the currencies depending on the trend line strategy. Let us describe you the rules that you should consider in fx trading, the trend line that you draw should connect minimum 2 higher swing lows and then wait for the price to hold the trend line at a certain stage. You should pace the buy order to 2-5 pips and above the candlestick and the stop loss should be to 2-5 pips below the candlestick. You should also, consider the risk-reward ratio in trading the trend line. Remember to place your profits in the previous swings.
The trend line selling rules
As we described the buying rules for trend line strategy there are also selling rules. The rules of executing short orders by the trend line strategy are: you should draw the downward trend line by connecting the 2 lower swing highs. You should wait for the price to touch the line at the certain stage. The placing of sell order must be 2-5 pips and it should be below the candlestick also the stop loss should be 2-5 pips and above the candlestick. The target placing should be done as we mentioned in the buying rules.
The trade management
The trade management is important in trading; you should be able to manage the trades by placing the stop loss accurately and analyzing the trades perfectly. If you sense that you are about to risk too much then make sure to place the stop loss before it is too late. Assume if the price moves twice the value you risked then you should be able to place the stop loss before you witness the amount you cannot bear.
Summary: the traders should be able to know what they are trading; the trading strategies they use should be well-known by them. If they are not aware of the Trend line strategies, they cannot trade using it. So as traders, it is a must, to learn the ways to trade using it and the ways to manage the trade is also very crucial in the Forex market. There are rules for buying and selling currencies so you should know that too. The Forex market is highly liquid and volatile too so if you are part of it make sure to run it as the rules say.