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3 Tips for Riding the Trend and Trade Like a Pro

“Trend is your Friend” – The adage never gets outdated. Still, traders find it hard to ride the trend. It is because there are not many tools to predict market continuation. So, how could you do it? Here are some key insights.

Tip#1: Use the pullbacks wisely

The pragmatist in the retail trader advises him not to be greedy and book profits too soon. So, a retail trader is more prone to gaze at the rally with awe than to be a part of it. However, it is prudent to book profits when you get a decent chunk. But here is the thing, you can always re-enter the rally. Most traders do enter a trending market expecting a continuation, but at the high only to exit with a loss on the pullback. Instead, use the retreat as your entry point. Whenever the market ebbs from the high/low, say 70-100 pips, you can always enter again. It reduces your risk substantially. You can also use Fibonacci tools to find the entry point as well.

Tip#2: Book partial profit

Nurturing the habit of partial booking can keep you out of two worries. One, exiting out of a position too early and then watching it with wonder. Two, not getting out where you ought to and then losing most of your gains. So, when you spot a trend move ahead, make sure you enter the trade with a decent lot size, and then set a clear road map of where to book partial profits. It also gives you room to enter on pullbacks as well.

Tip#3: Use Indicators

Traders generally use indicators to predict the reversal but not for trend trading. But there are indicators like ADX which can help you analyze the health of the trend. You can track it and unless it indicates a shift in trend, you can hold on to your positions. Instead of monitoring your P/L and the charts, an indicator can bring objectivity in your analysis.

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