Working out the Overall Trend in Forex -

1. Use the Daily Chart
2. Add your trend lines, is it up or down? If you can not tell then you should not trade that pair, move onto a currency that is trending good.
3. Look for retracements, there are lower highers in a down trend and higher lows in a up trend.

The above image shows the up trend in the daily chart on the GBP / USD and a possible retracement forming on the trend line, if we see some good confirmation in that area then that most likely is a good long trade.

A good spot to place a stop loss on this trade is just below the lowest candle wick on the daily once you believe it is starting to go back into the trend. If however the chart breaks the bullish trend line then this bullish trade is negated.

The above video : Traders Best Friend is the Trend By Richard Krivo – Is a highly recommended video on how to determine the overall trend of a currency pair. This video i have watched myself a few times, it is something that should never be ignored in all types of currency trading.

First of all look at the daily and four hour chart. Work out which way the daily trend is first. After that keep that in your mind, then go back to the four hour chart and look for indications of breaks in major supports, if this happens more than twice then the trend maybe on a change. If so after the second confirmation of broken support by the four hour you decide to enter then do so by placing a SL just above the previous high in the up trend. This ensures that if you are right that you are safe in case you are wrong.

The negative side of this strategy is that by doing so you most likely are risking over 100 pips, however in the same light if this is a change in trend then the reward can be ten to twenty times that amount. Each factor needs to weighed in to the trader. Look for confirmations of resistance via price action techniques before entering to give yourself even more chance of success.

NZD / USD Short

SELL @ 0.8250
SL @ 0.8330
TP @ 0.8125 adjust stop loss, if it retracts take profit, if it keeps dropping further keep it open.

The screenshot of the NZD / USD  above shows this in action over the last few weeks. Look at the two confirmations of breaking major supports before you know it is dropping or that the trend is going down now. Going by the 4 hour chart it shows that selling at 0.8250 has been very rewarding for traders for weeks. Look at the confirmations of resistance. There are 5. To me because of the trend change in the daily it shows that there is more probability of further downs if it breaks the 0.8040 area.  However if it breaks the 0.8150 area it shows signs of buying all the way to at 0.8270.

This is a perfect example of a normal trade

1000 units Long NZD / USD – It depends on your choice however overall you want a market that you believe will move a lot in your favor.

This is an example of Scaling into that same trade

100 units per 3 to 5 pips as the long position increases in profit

Eg.

• 1 x 100 units at 1.0350
• 1 x 100 units at 1.0355
• 1 x 100 units at 1.0360
• 1 x 100 units at 1.0365
• 1 x 100 units at 1.0370
• 1 x 100 units at 1.0375
• 1 x 100 units at 1.0380
• 1 x 100 units at 1.0385
• 1 x 100 units at 1.0390
• 1 x 100 units at 1.0395
• And lastly one 100 unit trade at 1.04

- Of course each trade can be broken up however you like, this is just an example of an extremely low risk way of scaling into a trade position. ( 1000 unit total divided into 10.. )

Making it a total of 10 trades each adding up to 1000 units total. This is best performed once the market has receded to a strong support level and then only place the buys in the direction of where you believe the market will head. One of the most positive aspects of this strategy is that it opens trades only as previous trades go into profit. However the negative side is it lowers the profit value compared to a single 1000 unit  trade. However with that being said it can always if unlucky turn around juts after the last trade opens so it is important to be on your toes if you wish to try this method and to also be willing to risk the amount whether it is a broken trade or not.

Image – Example image above of scaling in on a Forex Trade. Each blue line is a another trade opening as the market moves back on the NZD / USD on the Four Hour chart. In the chart it shows openings from 0.8100 all the way to 0.8150 with taking profit staring happen not long after last trade opening around 1.8170 to 0.8180 area. The beauty is you can hold onto certain trades longer or shorter depending on your risk assessment as the market moves in your favor.

Either way scaling in whether going short or long is a technique if mastered that can be both positive and negative and allow the trader to close some trades in profit even if the market turns against them near the end of opening all positions.

To see a great example of this high reward low risk form of trading with price action check out the video above.