What are some common trend trading strategies for forex trading?

While predicting future prices with certainty is impossible, the most common trend trading strategies involve trendlines and indicators to analyze historical data and current market prices. One of the most widely-used techniques for trend trading is the moving average crossover strategy. In this strategy, traders use two moving averages (a shorter and a longer period) to identify potential entry and exit points when the lines cross, signaling a shift in trend momentum. emoji_peopleReal-world example I once developed a moving average crossover strategy using a Bollinger Band crossover, and coded it into a trading bot on MetaTrader. Trendlines are often used to connect a series of high and low prices within an uptrend or downtrend, providing visual cues of support or resistance. Additionally, momentum indicators such as the Relative Strength Index (RSI) or the Moving Average Convergence Divergence (MACD) are popular methods of confirming the strength of a trend (or for signaling potential trend reversals). I'm a fan of Bollinger Bands, Keltner Channels, and the Donchian indicator (or, Donchian channels) for analyzing market volatility, but the best forex brokers offer dozens of indicators. The key is not to overly rely on one specific tool in your arsenal, but rather use a combination of tools and perspectives when analyzing markets that constantly shift and change.

What trading platforms have tools to help traders analyze trends?

A well-equipped trading platform is crucial for effective trend analysis. The best brokers in this category offer proprietary trading platforms that come packed with industry-leading tools, available for free to their clients. Proprietary platforms from top-tier brokers like SaxoTraderGO, from Saxo , and IG ’s web trading platform provide rich analytical tools, real-time data, and integration of third-party research tools like Autochartist. These platforms are invaluable for serious trend traders, offering the flexibility and depth needed to spot and capitalize on market trends efficiently. Third party platforms: There are also third-party platforms like MetaTrader 4 (MT4) and MetaTrader 5 (MT5), which offer a variety of customizable charting tools, automated trading features, and vast libraries of technical indicators – all of which are essential for trend traders. TradingView , which offers platforms for web, mobile, and desktop, stands out for its powerful social trading elements and sophisticated charting capabilities, allowing traders to create, backtest, and share trend-following strategies across a global community. That said, it’s important to remember that even with the best tools you can still lose money, and it's ultimately on you to learn and understand how the trading software works before trading with real money. I recommend using a demo account to test your trend trading strategy before using your live account.

What is the difference between trend trading and swing trading?

Trend trading involves holding positions over a longer duration – ranging from several days to months – allowing traders to capture major directional moves. It is a strategy best suited for capitalizing on broad, sustained trends, with the goal of maximizing gains by riding out significant price movements. In contrast, swing trading focuses on shorter-term price fluctuations, with positions typically held for a few days to weeks.

Best Brokers for Trend Trading

Written by Steven Hatzakis
Fact-checked by Joey Shadeck
Edited by John Bringans

September 30, 2024

Steven Hatzakis has been reviewing forex brokers for nearly ten years and has 25+ years of experience as a forex trader. His broker reviews are unbiased and independent, and his expertise is sought after for global FX conferences and speaking events around the world. Learn more.

Trend trading is a popular trading strategy that involves identifying and then riding price trends in the forex market. To get started with a trend trading strategy, you'll need access to powerful trading tools, high-quality market analysis, and a broker who can support this fast-paced strategy.

Whether you're trading forex, stocks, or cryptocurrencies, choosing the right broker is crucial for spotting opportunities and optimizing your trades. In this guide, I’ll share my choices for the best brokers for trend trading.