Source: FAM Drone

It is widely recognized in the currency trading world that the trend is your friend and any forex trading methodology based around following a trend is probably going to be both easy and effective.

The first step in using trend lines for a foreign exchange trading plan is to ascertain whether the market is rising, falling or is stable within certain parameters. Of course there’ll always be fluctuations, but at certain times you will see clear patterns. If the price is rising

If the price is going up, first draw a straight line thru the highest highs on the chart. This line will be sloping upward.

You can then use these two lines as support and resistance lines. This implies that you can assume that while the trend continues, the price will remain in the area between these two lines. Therefore , any time the price hits the top line you could sell, on the presumption that it’ll fall back. In a sense this strategy means going against the trend, but you would only hold that position for a short time.

or, any time that the price hits the base line you might buy, on the assumption that it will soon rise again. In this case you are following the trend which is often a better methodology. However, you must keep in mind that there will at some specific point be a real reversal and you could be caught out by this.

2. If the price is falling

If the price is going down, you can follow a similar method to the prior system. The lines you draw will be going downward but you’d still buy when the price hits the lower line and sell when it hits the upper line.

Article from Forex Ultimate System

If you’re losing with currency exchange, you probably want a forex trading course which will turn those losses into profits. Naturally this is the purpose of any foreign exchange trading course, but only in the sense of the final analysis. Then for most of us, we’re not that perfect trader in the 1st place. So a certain amount of losses must be accepted. It’s not an issue of getting rid of the losses, but of reducing them in order that they come out to less than the profits.

To try this, it is really important to learn how to lose successfully : to paraphrase, to deal with the unavoidable losses in the only way. Then move on . There is not any need to investigate it to death at the moment. You can look at all your trading at the end of the week or month and see whether any patterns are developing. But apart from that there’s no point in getting strung out about a loss. Quicker said than done, I know. But you can cut back your anxiety about losses by knowing your system extraordinarily thoroughly. All systems go thru bad times when they just seem to lose and lose, even when you are doing everything by the book.

From those back test results you should be able to prepare a calculation of the drawdown of your system. This is the most that you would expect to lose in a bad run. It is the lowest point that your funds would reach between 2 highs, subtracted from the high.

So look for the worst run of losses in the back testing results. At the worst point in the bad run it was down to 650. The drawdown here is the difference between 1000 and 650, i.e. 350 or thirty five percent.