Throughout my years of trading markets, I’ve learned that one of the most important elements in achieving profitability is being able to identify the long-term trend of a market and trading within the direction of that trend. In this article, I’ll share four reasons why it’s important to trade with the long-term trend.
1. Trading in the Path of Least Resistance
When you trade with the long-term trend, you’re trading in the path of least resistance. This means you’re increasing the odds of your trade moving in your favor. As my mentor once said, “Don’t try to stop an oncoming freight train by standing on its path.” Trading against a strong trend is like standing in the way of that train; it’s bound to crush you.
2. Clarity and Confidence in Your Trading Strategy
Trading with the long-term trend provides clarity and confidence in your trading strategy. When you know the trend direction, you’ll have a better understanding of whether you should be buying or selling. As trading legend Jesse Livermore once said, “Trade only when the market is clearly bullish or bearish.”
3. Improved Win Rate as a Trader
Trading with the trend improves your win rate as a trader. While no strategy wins 100% of the time, trend trading increases the chances that your trades will be successful. Over time, your winning trades will more than pay for your losing trades, resulting in overall profitability.
4. Confluence to Great Trading Opportunities
Trading with the long-term trend provides confluence to great trading opportunities. The trend is just one factor that contributes to identifying a good trading opportunity. When you combine the trend with other factors like support and resistance levels and entry signals, you increase the likelihood of your trade being a winner.
In conclusion, trading with the long-term trend is crucial to becoming a profitable trader. To learn more about “How you can Start Trading for a living,” sign up below for my Free Training on the “7-Steps to Financial Freedom through Trading“.