subject: 3 Reasons To Trade Forex With Trend Lines [print this page] Trend Lines are one the most powerful technical analysis tools. They have provided leading trading signals for a century in FOREX pairs, Stocks and commodities. In this article you will learn 3 reason to trade FOREX with Trend Lines.
Reason #1: Easy to Spot
Trend lines are a very easy to spot and identify properly. Unlike many patterns which are complex to identify and easy to misinterpret, trend lines are very easy to spot as they have very similar visual appearance. Their technical identification also allows the trader to establish his own degree of safety and to decide which patterns he wishes to trade, and which he does not. The flexibity of trend lines allows the trader to easily evaluate the strength of the setup and the projected profit or loss.
Reason #2: Appear in any security
Trend lines appear and have appeared in almost any FOREX pair, commodity or stock. Regardless of the market, trend lines are of a psychological nature and therefore occur in any tradeable security. This makes them a great signal to trade as there are countless profit opportunities. It also makes it easier to test the performance of trend line trading and to evaluate the profitability of these common trading setups.
Reason #3: High Reward, Small Risk
When trading trend lines, the stop loss is usually very close to entry price so the risk is very small. On the contrary, the reward for each setup is enormous and can even be 10 times the risk. This makes trend line setups very profitable and less risky to trade. This also enables the trader to use a more loose money management and highly increasing his yield on equity. The small risk in any trade also decreases draw down and makes the trader less likely to reach margin call, even when using risky money management techniques.
