Trend following is actually very easy to learn and looks to hold moves which last anywhere between a week to over a year. Of course if you get into the right trends you can make a lot of money so let’s look at the advantages:
Any Free Market Offers Trends
Currencies trend and so does any other free market instrument and they can all be traded the same way and you get bullish and bearish trends so you can make money in any economic climate.
Trade the Reality of Price Movement
Trend following decision-making doesn’t involve prediction, ‘gut’ feelings or “shooting from the hip” and also doesn’t involve studying the financial press. Trend following simple requires you follow a simple set of rules which are objective and allow you to see shifts in price momentum and lock into trends.
It Makes Huge profits
Trend following looks to compound absolute returns. It doesn’t shoot for ‘small.’ or average profits and in times of turmoil in Financial markets, it can make you huge gains.
Take Advantage of Mass Human Psychology
A currency price are just subjective expectations of traders reflected objectively. People’s reactions to markets always remain the same – the majority Follow each other and end up losing. Humans like to be social and conform, even if the group is wrong. When traders follow each other, they get caught up in the crowd hysteria and that means losses. Trend following will always make money because most traders simply cannot think by themselves.
You Don’t Need to Win Many Traders to Make Huge Gains
Trend following, has defined exit rules to control losses on your account and when quickly take losing trades to preserve the capital in your account. The win loss ratio doesn’t matter in trend following. If you hold a trend for week or months, it will cover a lot of small losses. You can have more losses than profits when trend following but the size of your profits, can be sometimes 10 – 20 times the size of your losers so you can see why you don’t need to have a high ratio of winners to losers to make big profits
Following Big Moves Means Low Cost of Doing Business
If you day trade a lot you lose a lot in transaction costs in relation to the profit you are aiming for but in trend following is not so. With this long term method of trading, your cost of doing business is minimal and increases your overall profits.
If You Want to Make Big profits the Good News is This Method is Easy to Learn
You don’t need any fancy systems or indicators to learn this method of trading it can be learned by anyone and also, you have the confidence of knowing its worked since market began. So rather than struggle to make money and make a lot of effort in short term time frames, follow trends via price action and make huge profits like the pro traders do.