“Trend” and “Range” are two different price properties that require totally different management techniques and points of view. You need to ask yourself which of those paths fit you the most, as in the FOREX you have an opportunity to profit by using each one of them separately. The FOREX is comprised of trend traders and range traders, with the trend traders being the majority these days.

A trend is a general direction of a market or of currency price (some see a trend as a deviation from a range). There are long trends and shorts trends, and identifying one can be highly profitable. The basic intention in forecasting a trend is to invest in the trend and sell it before the trend reverses. The bet traders take when getting on a trend is that the movement will continue in its present direction and that if it reverses they would be able to sell it and minimize their losses.

Of course, FOREX trend trader lose more often then the times they win, a fact which requires them to have uncompromising self control, awareness of emotional urges and realizing that making a mistake on a specific currency trend does not make them lose face. Usually trend traders use the stop-loss system and should never risk more than 1.5-2.5% of their funds on any given trade. Trend traders who use leverage take a big chance in both directions and grant themselves little room for mistakes. If they are right in their forecast and are able to catch a strong trend move, the profits can be enormous.

On the other hand, they can lose their entire capital in the blink of an eye. As already mentioned, trading trend requires discipline. The true wisdom in trend trading is to keep your loses to the minimum and your wins to the maximum so that in the end of the day you’ll have more money in your account. Always remember trend trading without constantly using stop-loss (trading with very tight stops) can be very risky.