Rules for trading trendlines

Posted March 6th, 2010 by Rapid Forex 2 Comments »

It’s Saturday morning and I just poured a cup of coffee. Even though I prefer trading days, I do like the forced break of having no forex trading with weekends off!

Today I’m going to give some quick tips about trading trendlines, then I’m off to the beach to surf some non-forex waves :)

When looking at trends, remember the following:

  1. Draw your trendlines (inner, outer, and long-term outer). This will help you determine if the market is trending up or down, or if a trendline has been broken.
  2. Locate the price at which you anticipate the market will bounce (at the trendline).
  3. Find the last level of support or resistance to determine where to place your stop loss order.
  4. Practice sound equity management. If you can’t afford the potential loss (the loss you would incur should the market reach your stop loss order), don’t make the trade.
  5. Create a trading plan. Trade the plan.

Follow these rules and you’ll prevent yourself from lots of dumb mistakes. If you find that you can’t follow a rule, it’s telling you not to trade. If you can’t draw trendlines, anticipate a market bounce, find support or resistance levels, trade within proper equity management guidelines, or create a trading plan….

JUST DON’T TRADE!!!

The time will come when you can follow these rules and the forex will still be there.

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Related posts:

  1. Trends and Trendlines | Uptrend Examples
  2. Trading Currencies when the Downtrend Breaks
  3. Downtrend Examples | Lower Lows and Lower Highs
  4. 8 Rules For Successfully Trading Candlestick Formations
  5. Trading Rules for Support and Resistance

Tags: , , , , ,   Posted in Technical Analysis

2 Responses to “Rules for trading trendlines”

  1. Vincent ThomasNo Gravatar Says:
    March 17th, 2010 at 11:18 am

    Trading strategies can get too complicated if you fall into analysis paralysis. I’ve done trades simply by looking at trendline breaks and paying attention to fundamental announcements to make sure no news was going to rattle my trades. I’ve done well with this & you gotta love the simplicity (so easy a caveman can do it)

    [Reply]

    PeterNo Gravatar Reply:
    December 6th, 2011 at 1:55 am

    Vincent,
    I agree 100% with everything you have said.
    Trading trendline breaks is where its at.
    1 hour charts are my favourites
    Indicators are about as useful as flies on the windscreen.
    Why would a caveman need trend lines ? (Just me trying to be funny ).
    Best wishes,
    Peter

    [Reply]

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