First look at any forex chart and what do you see?
Trends - big trends, where the currency trades in a specific direction for many weeks, months or in some instances years. Now most traders can't make money from these trends due to having the wrong mindset. Let me give you a typical example of what happens to many traders.
They pick the direction of the trend and get a profit and become excited. The bigger the profit becomes the more excited they get. As the profit grows so do swings against their position and open profit is eaten into. When this happens they panic and want to take or protect the profit so, they snatch it or put their stop to close, get bumped out the trade and have a marginal profit. The trend then continues making hundreds or even thousands of percent and there not in.
You Need to do this to Win
If you want to get the really big profits, you need to adjust your mindset, to accept open equity drawdown against you and keep your eye on the bigger price. You MUST Put your stop outside of random volatility and hold it back.
If you are trailing a stop, a good level is around the 40 day moving average or nearby trend line support.
While you will give a bit back at the end, you will get a huge chunk of the major trend and that's means a lot of profit. In fact, if you got 50% of every major trend, you would be very rich.
If you want to win at forex, you have to accept drawdown and hold your stop back. You need to take a calculated risk to make a big reward and in long term trend following in forex this means having the confidence and discipline to ignore short term drawdown, hold your stop back and keep your eyes on the big price you will receive at the end.
The big forex trends offer you big profits, so have the courage and the discipline to accept them.
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