4 Forex Trading Strategies to Ride Massive Trends for Profits

“After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: it never was my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight.” – Jesse Livermore

The formula to be a profitable trader is simple; using trading strategies that allow you to ride your winners while keeping your losses small. While this may sound simple, it is by no means easy.

In today’s article, we are going to cover 4 trading strategies to ride massive trends via trailing your stop loss.

• Trailing via moving average crossover
• Trailing via moving average close
• Trailing via break of trendline
• Trailing via break of structure

Do take note that these strategies are referring to how to manage your trades and not how to enter them. If you need a guide on how to find trade setups, make sure you check out our free day trading guide here.

Let’s break down each of these trading strategies and how you can incorporate them into your trading plan. I will also cover why it is crucial ti have multiple exit trading strategies.

Trading Strategy #1: Trailing Via Moving Average Crossover

There are many trading strategies that you can use out there, but trailing via moving average crossover is perhaps the easiest and most common method.

In the above example, I use the 20 period and 50 period moving average. This simple method involves closing out your position once the moving average crosses. Suppose you were short in the above chart and was considering when to exit your position. You could use the moving average crossover as an indicator that the trend has ended and it is time to take your profits and close your trades.

Trading Strategy #2: Trailing Via Moving Average Close

Trailing via moving average close is very similar to trading strategy 1. In this trading strategy, you will be exit your positions when price closes above/below the moving average.

Here’s an example of this trading strategy:

Again, I have used the similar chart as trading strategy 1, except that you would have exited your trade when price closed above the 20 period moving average (blue line) as highlighted in the chart above.

Trading Strategy #3: Trailing Via Break of Trendline

One of the most powerful trading strategies is to draw a trendline and trail your stop loss according to the trendline. But in case you are new to forex trading and do not know how to draw a trendline yet, you can check out our youtube video on trendlines here.

The chart above shows how you can use the break of the trendline to exit your position. The idea is simple; when you see a close/above the trendline, that is an indicator that you should be squaring/closing off your position and taking profit.

Trading Strategy #4: Trailing Via Break of Structure

Perhaps one of the most logical trading strategies out there, trailing via break of structure involves exiting your positions when there is a break of a swing high/low point or chart pattern (head and shoulders, inverted head and shoulders, double top, double bottom).

Sounds confusing? Don’t worry because I will show you some examples and I promise that it will all make sense.

In the above example, the circled portion shows that price has broken below the neckline of a double top pattern. Suppose that you were long and didn’t know when to exit your trading position. The break of the neckline would have served as an indicator that it is time to exit your position and lock in your profits.

In the above chart, we see that price has closed above the prior swing high level so 102.412. If you were short, that would have been an indicator that it is time to exit your position.

Why You Must Have Multiple Exit Trading Strategies

Earlier on, I showed you 4 powerful trading strategies that you can use to ride trends and maximize your profits. A common mistake made by most amateur forex traders is that they only have a single exit trading strategy.

Consider the following scenario where you only use 1 out of the 4 trading strategies; trailing via break of trendline.

If you had solely rely on the trailing via break of trendline, you would have given back almost half of the profits back to the market! And that’s the tricky part of trading where you want to give your trades enough room to breathe but also not too much that you lose majority of your profits when price starts to retrace.

This is why you need to incorporate multiple exit trading strategies into your trading plan. Amateurs rely on one way to get out of the market, professionals have multiple ways to secure the profits they have captured.

Conclusion

In this lesson, we talked about the 4 trading strategies that would allow you to maximize your gains and ride massive trends. The 4 ways methods covered are:

• Trailing via moving average crossover
• Trailing via moving average close
• Trailing via break of structure
• Trailing via break of trendline

I also covered why it is vital to implement more than 1 of these trading strategies into your trading plan. If you do need a trading plan that teaches you how to find profitable trade setups, then make sure you grab a copy of our free day trading guide here.