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Technical Analysis: Trend Following for Investment as well as Trading

Technical Analysis :

Technical analysis assumes that all information studied by fundamental analysis is already reflected in the PRICE of a given stock. It is a method employed to evaluate stocks by analyzing statistical trends gathered from trading activity, such as price and volume.

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Trend Following: What is that?

There are forces of nature that function with their own characteristics. Eg. Gravity. It is an invisible force that ensures that everything stays down on earth. Anything threw up in the air simply falls down due to gravitational force. Similarly in investing and trading price trend is an important force. Surprisingly price trend is the cause as well as the effect impacting prices.

Movement becomes effortless or with the least resistance when one goes in the direction and in sync with various forces at play. Stock prices move in trends. Trends can be major of 2 types: Uptrend and Downtrend. Sometimes when the market is not trending it can be said to be flat.

It makes sense to follow something that works. That is why Trend Following!
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HH=Higher High LH=Lower High
HL=Higher Low LL=Lower Low

Trends can form on all time-frames namely Hourly, Daily, Weekly, Monthly. From an investor perspective, it is important to analyze and study trends on higher time-frames like weekly and monthly charts. From a trader's perspective as the horizon is smaller it will make sense to study hourly or daily time-frame charts. Price trends on higher time-frames have more impact on the stock prices in the long-run.

Uptrend :

In an uptrend, the stock price tends to make a series of Higher High(HH) and Higher Lows(HL).

All the Lows are higher than the previous Lows indicating that there is constant demand at declines which eventually leads to higher prices in the future.

As the natural momentum is upward the stock price which is in uptrend moves effortlessly on the higher side. Investors must invest only in those companies which are in an uptrend on higher time-frames of weekly and monthly charts.

Downtrend :

In a downtrend, stock price tends to make a series of Lower High(LH) and Lower Lows(LL).

All the Highs are lower than the previous Highs indicating that there is constant supply at upsurge which eventually leads to lower prices in the future.

As the natural momentum is downward the stock price which is in downtrend moves effortlessly on the lower side. Investors must always avoid investing in those companies which are in a downtrend on higher time-frames of weekly and monthly charts.

Trend is your friend until it bends !

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There are a lot of trading strategies in the market. Most of the time new traders and part-time traders look for short-term trading strategies. Scalping is one of the best short-term trading strategies in the market. Traders can make a profit in a short time like five to ten minutes. Traders use a minute time frame for this kind of trading strategy. Always choose a scalping-friendly broker like Eurotrader.
 

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Support and Resistance Professional traders follow which is why the value of Support Resistance is high. Support and resistance is an area from which price can take an opposing position due to barriers. Support or Resistance Price can volatile.

Therefore, the value of support and resistance in the Forex market is a lot. I didn't have a good idea of support/resistance when I was a new trader. My trading results changed as soon as I found out Forex4you as my broker. They are very reliable and helpful.
 

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As a newbie, before trading in the forex market a trader must study on forex market very seriously. He should research all the broker before trading under a broker. After full inspection I decided to choose TP Global FX to trade in the market. Because they helped me to understand all the information about market and they helped me to reduce the risk and ensure profit.
 

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Good description. Additionally, there are several different ways to follow trends. You can choose the right method depending on your preferred time frame and the currency pair or asset you are looking at.

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The existing analytical skills must be able to be well cared for, this is needed and necessary so that traders can be better and can be maximized in carrying out trading activities that are in line with expectations while on a real Tickmill account.

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On 3/12/2021 at 11:53 AM, uncle gober said:

The existing analytical skills must be able to be well cared for, this is needed and necessary so that traders can be better and can be maximized in carrying out trading activities that are in line with expectations while on a real Tickmill account.

If we are using a correct Analysis in doing our trading then we will be able to do our trades with SUCCCESS 🙂

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A trader should pick a suitable broker to trade in the forex market. Without a suitable broker it is quite difficult to invest in the huge market. Broker can be the well wisher for any trader. But Broker has to be good. Wrong broker can create difficulties in trading. As a trader, I choose Forex4you as my broker. It provides low spreads and high leverage. The trading strategy is quite easy.
 

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selection of an existing broker must be able to run properly, this is needed and necessary so that traders can be better and can get more leverage in getting the security and trading comfort that is in line with expectations with Tickmill.

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5 hours ago, maspluto said:

selection of an existing broker must be able to run properly, this is needed and necessary so that traders can be better and can get more leverage in getting the security and trading comfort that is in line with expectations with Tickmill.

We must remember that if we are trading with an ECN Forex broker then it will become easy for us to make the profits.

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  • 3 weeks later...

Trade the trend - this is one of the few good decisions! But the trend to trade should be able to. More precisely you need to correctly identify the trend and the entry point in the deal. exit point in my opinion is even more important than the entry point!

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The trend is your friend. So it is necessary to follow the trend every time. If you do not follow the trend, it will be difficult to make a profit. Because the Forex market depends on supply and demand. So if a trader trades against the trend, he has a chance of losing 70% of his time. So I tell every trader to follow the trend.

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On 4/9/2021 at 11:36 AM, uncle gober said:

making profit in forex is not an easy matter, so it is important for traders to be more optimal in surviving and become a trader of the month with Tickmill.

We will need to do a lot of Efforts in doing our trades. This is how we can become better Forex traders.

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