Power of Trading
A forex trader shares a trend-following forex trading system that generates 90% accurate signals for buying and selling, best suited for trending markets. Proper risk management is necessary, with a rule of thumb being to risk not more than 5% of your capital. Traders should not try to catch tops and bottoms, over-analyze, or let bias influence their trades. Even with losing streaks, profitable trades can be achieved in the long run. A download link for the trading indicator is available in a Telegram channel.
Forex Trading: Best Indicator for Trend Following
Introduction
Forex trading is a dynamic market where trends change rapidly. Successful trading requires effective strategies, and one of the best indicators for trend following is the Moving Average Channel with MACD. This trading system generates accurate signals and has a high level of accuracy, making it one of the most reliable strategies for traders.
Accuracy of the Trading System
With a 90% accuracy rate, this trend following system has been tested over a hundred times. Such a high success rate makes it an attractive strategy for traders looking to maximize their profits. However, traders need to remain disciplined and follow the rules of the system strictly to ensure success.
Trading Rules
The rules of this trading system are straightforward; traders only need to look out for the trigger conditions for a trade. The buying conditions involve checking the moving average channel and the MACD histogram. If the price closes above the moving average channel, check the MACD histogram, and if it is above his gold line, the conditions for a buy trade are met. Execute the buy trade here, and the trade size should be two lots. For the sell trade, traders just need to follow the opposite condition.
Sideways or Flat markets
It is crucial to understand that this trading system works best in trending markets. It is best to avoid trading in sideways or flat markets. This approach maximizes the effectiveness of the system, ultimately resulting in the main goal of making money for the trader.
Proper Risk Management
It would be best not to risk more than five percent of your capital per trade. Proper risk management means trading within your account size, and the general rule of thumb is to risk not more than five percent of your capital. Losing trades may occur, and one should not aim to win 100% of all trades as it is challenging to control the market. Instead, aim to have net profits in your account at the end of the month. Without proper risk management, traders may lose all their winnings from the previous month in a single, over-leveraged trade resulting in a margin call from their broker.
Trading Style
While many trading strategies require different risk management styles, it’s best to align your risk management approach to your trading style. A scalper or day trader may have different trade sizes than a swing trader or position trader due to their respective trading styles. Ultimately, a trader must understand their trading approach, determine the best risk management tools, and execute their trades through a disciplined, structured approach based on their strategy.
Don’t Catch the Tops and Bottoms
Traders should avoid trying to call every market or catching the tops and bottoms of a market. Trying to catch market tops and bottoms is similar to trying to stop a charging bull or bear and hoping it will reverse direction. Such an approach exposes a trader to significant risk and is considered a high-risk approach to trading.
Avoid Over-analyzing
Many traders procrastinate while analyzing a trade, causing them to miss out on potential profitable trades. They may wait for the perfect price or for all indicators to align before entering a trade. The key is to stick to your trading plan, avoid over-analyzing the markets, and maintain a disciplined approach to trading. Trading is not about being right all the time; it’s about managing losses effectively and maximizing profitable trades.
Focus on Confluence
When buying or selling a specific pair, it is essential not to be biased due to trade calls made on websites or recommendations from friends. Instead, traders should focus on confluence that aligns with their trading plan. Once most of the criteria are met, and technical evidence is available, traders can take the trade based on their own analysis.
Don’t Give Up
Losses are a natural part of trading, and traders will encounter losing streaks. However, traders must remember that trading is like any other investment and requires a long-term approach. A trader can lose 60 to 70 percent of their trades and still profit in the long run. When encountering losses, traders need to maintain a disciplined approach and trust their trading plan.
Conclusion
The Moving Average Channel with MACD is an effective forex trading system for trend following. This system generates accurate signals, and with a 90% accuracy rate, it has been tested over a hundred times. It is crucial to follow the rules of the system strictly and have proper risk management to ensure success. By avoiding biases, over-analyzing, focusing on confluence, avoiding extreme highs and lows, and remaining disciplined, traders can efficiently use this trading system to maximize their profits.
