Fishing for trends

The trend spotting strategy assumes that the present direction of the price rate will continue into the future. It can be used in three main time-frames: short, intermediate and long-term, with the trends being different for each.

For example, here is a possible scenario in the Forex market:

Over the last 12 months the trend is an uptrend, over the last 30 days the trend is a downtrend, and over the last 24 Hours (intra-day) trend is an uptrend.

Regardless of the chosen time frame, traders will remain in their position until they believe the trend has reversed.

So the goal is to spot a trend that you believe in and trade according to it. Needless to say, you will need to monitor the trade, in case you were mistaken and the trend vanishes or reverses. Then it's time to cut your losses by closing the losing trade or by reversing - closing the trade and opening a following, opposite trade.

Warning: Speculating on Forex rates involves great amount of risk. Be advised that even the most sophisticated traders can't always predict market movements' directions.

That is all well and good, but how am I supposed to make any money with the rates changing around 0.1% a day?

In the Forex market, movements of 0.1% in currency rates can mean profits of hundreds and thousands of dollars. How is that possible?

With the use of "Leverage", the Forex traders' best friend and worst enemy.