Profit from long term trends (weeks or months) Easy or Hard? Your tips please!

My main interest is in mid or long term trading. Ideally I can spend, say, 20 min a day to follow market currency trends and identifying long term trends, say, a major currency pair can change 3 to 10% within a few month period. For example, see the UP trend shown in the following AUD/USD chart, from early April to late Aug last year, about 10% AUD appreciation.

Once you locates such long term trend, then you can buy for a up trend, or sell for a down trend, then let it runNing until the market reverses, then you could take profits .

Assuming you have A$10k and a leverage of 20 times, then you could trade 2 lots of AUD/USD, it’s about A$200k, then you could make around A$20k in 5 months if you could keep your holding long enough and let your profit continues running without selling it too early. But this sounds too easy to make money in trading forex.

I WONDER what would prevent you to succeed the above? Thanks for your great helps.

In practice follow the trend is not that easy as is thought. There are multiple timeframes and every timeframe has its own trend. When you trade live, the market makers are also stophunting retail traders out of the trend. Hence your bias might be correct, but you get stophunted first and then the trend continues. So identifying these stophunts will help you a lot. You can watch btmm and ict videos on Youtube for you to clarify these things.

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Almost all my trading is long-term trend-following off daily charts.

The main issue is setting a stop-loss or exit signal which gets you out before a minor pull-back becomes major draw-down. I find two ways to meet this - one is pyramiding trend-following positions in the best trends: if the trend is good but less strong than that, I exit after either a sudden major move with-trend or after just 2-3 days with consecutive closes in the direction of the trend. In both cases, price weakness normally follows which presents a good opportunity to re-enter.

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I am new to forex trading, I though basically prices are determined by supply and demand, have not thought about other side of forex trading, it’s a war game so big fishes have strategies to eat small fishes, so stop hunting would be one tool for small fishes!

I have checked the youtube video you suggested, looks not having stop loss order too tight can be one way to avoid it; also watched the video from btmm, looked rather complicated for me to understand the process, may need to play it a few more times to understand.

Thank you for your comments, very helpful.

Thanks, I will read more about the strategy to understand.

Yes it does take practice indeed. Just try out and see what works the best for you :wink:

Profits in the financial markets require multiple skills that can locate appropriate risk vehicles, enter positions at the right time, and manage them with wisdom and a strong stomach before finally taking an exit when opportunity cost turns adverse. Many investors, market timers and traders can perform the first three tasks admirably but fail miserably when it comes time to exit positions

Can you elaborate this a bit more, are you referring stop lose exit, or take profit exit, should these two exits be treated differently? Thanks

Looks simple, doesn’t it? But let’s look at one possible scenario if you were to enter long with 2 lots at the current price:

Price decides to move lower, let’s say 311 pips down to the previous swing low. And because you didn’t have a stop loss your account is now down $6,220, or 62%.

Now what do you do? You don’t have the luxury of hindsight. What if this pair is now in a down trend? All sorts of scenarios will be running through your head now, and you are not sleeping at night thinking you have completely blown your account. So you search the internet for articles to help you justify holding on to this trade, which you will always find if you search hard enough.

This is the risk you need to think about, because the chances of it going this way are usually much higher than price continuing to move higher. Don’t think about what you could gain…think about how much you could lose.

Good luck!


Totally agree with your point here: think about how much you could lose!

I have a few comments to your example above:

  1. Indeed 62% down is a rather big loss, so set up of stop lose orders is a must, not an option!

  2. From the same chart, if entry order was placed much earlier, say, at the price point of 0.65, then you have a rather high profit when you exited at price of 0.7533, you already have a profit over 1000 pips, then 311 pips down became not a big issue. So for up trend your entry point should be early, or at least not too late.

Thanks for your good example.

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  1. Agreed. But where would you put your SL using a 2 lot position? Even if you set it at 50 pips, that’s $1,000 you would lose. And 50 pips isn’t enough when you’re looking at a long-term position trade.

  2. Again, hindsight. If you go back to May 2020 when price was at 0.65 and you delete all the candles to the right, then you don’t have the benefit of knowing price will continue to rise. Nobody knew the correction from the March lows would be so extreme, or last so long.

But yes, IF you had entered there and were mentally able to ride the draw-downs along the way, you would be sitting pretty right now. But a more realistic approach would be to scale in smaller positions as price increased.

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