You have probably heard the term over a thousand times,
"The trend is your friend," but do you actually follow it?
You would be amazed by how many new traders get blown up
because they insist on trading against the trend. When you
think about it, short-term trading is really a simple game.
If there are more buyers than sellers, you buy, if there are
more sellers than buyers, you sell. Trending markets are
essentially telling you who is in control and going against
them is almost always a loser's game.
What should traders do? - Don't fight the trend!
From the end of Nov 2002 to January 2003, the Euro rallied
nearly 1000 pips. From the chart below, you can see
that the trend during that time, was pretty much straight up.
Therefore, traders who were trying to fight the trend, did so
unsuccessfully. Those who consistently tried to find the top
in EUR/USD, did nothing but lose money during the 3
months. Traders who were smart enough to go with the
trend would have been able to take advantage of at least a
part of the 1000 pip move.
Thanks for sharing this useful information about Forex Risks, this may helpful for beginners.
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