The trend line is a very intuitive and very simple tool, but there are also precautions for trend lines. In addition to single-use, trend lines can also form trend channels to extend applications.

What is Trend Trading and How to do it to make profits?

We suggest that you draw more lines when analyzing the disk, and you need to draw more not only the horizontal support and resistance levels, but also the trend line. The trend line is convenient to use. A straight line can be used to predict the market outlook. Drawing a trend line is very simple. Basically, there is nothing more than drawing a trend line: in an upward trend, connect the low point and this low point to draw an upward trend line; in a downward trend, connect the high point and the second high point to draw a downward trend line. Don’t draw a trend line when the market is consolidating.

Figure 1 is as of July 30, 2019 on OANDA MT4
Figure 1 is as of July 30, 2019 on OANDA MT4
Which MT4 chart type is the best to analyse market trend?

Drawing trend lines is also a matter of care.

1. The trend line can be formed by connecting the low and low points or high and high points of the K-line entity, or by connecting the low and low points of the shadow line of the K-line or the high and high points, but it cannot be formed by One is the high and low points of the K-line entity and the other is the connection of the high points of the K-line shadow.

2. The trend line cannot penetrate any K-line entity. If the trend line is formed by connecting the high and low points of the K-line shadow, the K-line shadow should not be penetrated. If the trend line is broken, a new trend line needs to be drawn until this condition is met.

Figure 2 is as of July 30, 2019 on OANDA MT4
Figure 2 is as of July 30, 2019 on OANDA MT4

3. The slope of a suitable trend line is recommended to be between 30-70 degrees. If the slope is too large or too small, it is not easy to use.

4. The trend line can indicate the trend, but the trend cannot be confirmed.

5. When drawing an upward trend line, the high point must move up; in the same way, when drawing a downward trend line, the low point must move down. Otherwise, even if the so-called trend line is drawn, it is a false trend line.

6. The trend line does not need to start from the highest or lowest point.

7. There may be many trend lines that meet the conditions. It is recommended to use the one that has been verified the most times. When it comes to the application of trend lines, it can be very simple, that is, close to the position of the trend line, you can prepare to enter the market with the K line reversal pattern.

Figure 3 as of July 30, 2019 on OANDA MT4
Figure 3 as of July 30, 2019 on OANDA MT4

In addition to the use of single trend lines on OANDA MT4, it is also a good way to use trend lines to build channels. The trend channel has one more parallel line than the trend line, and if a trend channel can be drawn on the disk, the next period of trading can be very worry-free, because in the up channel, there are more orders or more positions in the lower track. Single, the upper track position is considered for exit; or in the downward channel, the upper track position enters the empty order or the empty order for adding warehouse, and the lower track position is considered for exit.

Figure 4 on OANDA MT4

Now the trend channel is broken. If the trend changes, use the 123 rule. If the trend only strengthens, then draw parallel lines again. With regard to the way the trend channel is drawn, the author still has a lot of words. The trend line needs to be drawn first, and then the low point or high point between the two high points or low points connecting the trend line is searched for, and the parallel line of the trend line is drawn through this point. As mentioned above, if this parallel line is broken, the parallel line closest to the trend line but not broken by the K line will be found again. Finally, the author reminds you that a trend channel is better to use, whether it is a parallel line or a trend line that is broken, you can translate the channel once to find a short-term target point.

Figure 5 on OANDA MT4
Figure 5 on OANDA MT4

Trend lines and trend channels are both very useful tools. Do not pick the market, do not choose the cycle, and do not choose the single cycle. It is better to trade with the trend. Of course, trend lines and trend channels also have shortcomings, that is, they seem stable, but they are not stable. If the position is broken and the trend has not changed, then the trend line or channel cannot be used in a short period of time, and we can only wait for the next opportunity.

What is the Most Profitable Strategy? Scalping, Swing-Trading or Trend Trading?