Introduction

Okay, so you have a few months under your belt and are earning profit from your trading. You have developed a respectable trading portfolio using only the most fundamental CFD techniques. Now it is time to start improving your trading.

The Miracle of the Trend Trading (yes)!

A trend trader is someone who uses what is called a trend-following strategy, which is based on the identification of patterns in the price action of an asset. A trend trader will purchase a security if they anticipate an upward trend in the value of that security. Similarly, if they see a declining trend, they will sell.

Trading with the trend can be a short, intermediate, or long-term strategy. Until they believe the trend has reversed, traders will sit on their hands regardless of their use period. It is important to remember that reversal timing might vary throughout periods.

Trading with the direction of a market trend is a typical tactic. Instead of considering the fundamentals of businesses, it is centered on the technical examination of market prices. There is no shortage of manuals or methods to choose from.

What you need to know about trend traders.

An uptrend is present when the market is making new highs regularly, and this is when a trend trader could consider making a buy. A trend trader may decide to sell if the price has made lower lows than it did previously.

To try and identify trends, trend traders employ various techniques, such as moving averages and the Relative Strength Index. No matter the approach, the ultimate result is the same; observe the trend. Once a trend has been identified, a trend trader will often ride it out for as long as it remains intact, which might be anywhere from a few months to three years.

Let’s Get Serious

The direction of trends for financial instruments is analyzed by traders using the trend trading approach. Investors are seeking to acquire more of the asset to ride out a rising price trend. On the other hand, when the trend is falling, traders "short" (or sell) the market.

One of the safest methods to participate in the stock markets, trading with the trend is also a fantastic technique to maximize profits. Among their many market techniques, trend trading tactics are a staple for VESTINGFX's best analysts. In addition, they constantly check that they are trading with the trend.

What Are Trends?

There is a wide variety of forms that trends may take. Some channels have a single trendline extending in one direction, whereas others have a parallel upper and lower trendline. It is crucial to note the trend between an uptrend and a downtrend, as the latter will only have one trendline to function as support or resistance. 

Remember that the human character of the market means that trends do not always follow a perfectly symmetrical trend line. One must be adaptable and responsive to the market to succeed in trading.

Trend trading is often misunderstood as being simple by novice traders. Determine the direction of the trend and enter the market at the same time. However, this is far more difficult in practice.

Trend following strategy

Traders that follow the trends of an asset build trading techniques based on that trend. The premise of a trend-following approach is that the present price trend will persist without interruption. Trading a long position and riding out an advance might result in a profit. Also, if the trend is trending downhill, you may decide to sell your item.

Short-term trend trading

Short-term traders, like day traders,​​ seek to keep an eye on trends that occur during the day in short intervals to attempt and gain from short-term price variations. There are several common tactics that intraday traders prefer to adopt, such as scalping and several intraday trend-following strategies.

Intraday trend trading

Traders that focus on intraday trends maintain their holdings until the close of the trend. As a result, day traders can examine trends that are only in effect for a limited time of the day, whether that is a few minutes or a few hours. Intraday trend tracking entails keeping tabs on the market's more ephemeral gyrations and swings.

For the sake of argument, assume that the day exhibits an uptrend characterized by price action that generates greater relative highs and lows. If the trend abruptly reverses, traders may protect their positions by setting a trailing stop above the low and again below the next higher low in the trend. When tracking a decline, intraday trend following might be useful as this incorporates a short-selling method typically utilized by short-term traders.

Popular trend trading indicators

Traders may use some technical indicators to their advantage when devising trend trading strategies. The following are some trend traders' most often-used indicators, which may be plotted on trading charts.

Moving Average Convergence Divergence​ (MACD):

This aids traders in gauging the market's current momentum. It is a useful oscillating indicator for spotting emerging trends and determining whether they are bullish or bearish. The VESTINGFX software makes it simple to incorporate MACD indicators into your charts.

Relative Strength Index​​ (RSI):

Traders use this metric to determine if a market's momentum is picking up speed or slowing down. In addition to gauging whether a stock is now overbought or oversold, traders may use this indicator to spot trends and selling opportunities. VESTINGFX users have access to the RSI indicator directly on their platform.

Conclusion

Trading CFDs is similar to trading FX in that it allows users of our VESTINGFX platform to purchase or sell multiple units of an instrument based on the direction of the price. Creating an account with us will allow you to trade CFDs. Realizing that a trade position might result in profit as much as a loss if a trade does not go the desired way is one of the hazards of trading with derivatives.

You may draw trendlines using the sophisticated technical analysis tool available on the VESTINGFX platform. Trading trends' price activity and general direction may be highlighted across several chart time frames using customizable charts and drawing tools. Incorporating these enhancements allows traders to perform even more effectively and successfully.