Learn Forex Trend Reversal Strategies - Counter Trend

A trader must create a trading strategy which they stick to when trading the online FX market. A trader must have the discipline to follow the rules of their trading strategy at all times. That's why it is better to come up with trading strategies that are profitable - profitable systems will be a lot easier to follow and stick to. This is because a trader knows that by following the rules of their system they will be successful.

A carefully designed trading strategy which has been back tested and proven to produce profitable results is one of the keys to becoming successful when trading the FX market. This type of strategy will make it easier for the trader to follow the rules of their trading strategy because they already know that the trading strategy is profitable, therefore maintaining the discipline to continue following the trading system will be much easier.

Successful trading strategies will also include:

1.Money management rules

2.Forex Psychology Mindset

These 2 will greatly improve the success of any trading system.

However, Let us look at price action strategy before explaining more about forex money management & forex psychology.

Counter Trend Strategies

Counter trend strategies are best used to place trades on major resistance and support areas where price is likely to reverse. These are the support and resistance levels where price has not broken before.

However, this strategy isn't the most reliable forex trading method because trying to catch the market top or the market bottom is not the best strategy as the trend may continue to move in the original direction of the trend for quite some time.

This strategy should therefore only be used to trade currencies that rarely trend - these are the currencies that move in a tight range. Traders can draw support and resistance levels of the price range and they will then use these levels to open trades - traders will open buy trades at the support level and traders will open sell trades at the resistance level. For a range bound market the prices will keep bouncing off these points and the traders will open trades and keep trading these price bounces.

Trading Strategies Tips

Once a trader has come up with their strategy, they should also include the following so that to make their trading strategy more successful.

1.Money Management Rules

2.Forex Trading Psychology

Money Management Rules

Money management rules should be part of your trading strategy - these rules will help you as a trader to manage risk. This means that you will use the two rules of forex money management - these are risk : reward ratio & drawdown reducing technique when placing your forex trades to determine the lot size that you will open in the market. The most popular money management rule use in forex & the one that you should also add to your trading plan is the rule that says a trader should never risk more than 2% of their account balance on any one single trade.

To learn more about these two forex money management rules, traders should read the money management guide that is on the learn forex trading courses section of this site under the forex key concepts lessons.

Forex Trading Psychology Mindset

In order to become successful when trading the forex market a trader has to learn about forex psychology. The forex psychology or mindset that is required to become successful in forex trading is one that avoids the emotions of fear & greed while trading the market & is a mindset of total discipline that a trader will follow all their trading rules & their strategy & only trade with signals that are generated by their forex strategy. With discipline a trader will not trade unless their strategy gives a trading signal. A trader will have the mindset of only following their trading system 100% all the time without second guessing the trading system. A disciplined trader will also not place trades in market just because the currency market has started to move upwards or downward, instead a trader will wait for a trading signal to trade to be generated by their trading strategy.

In order to study more about forex psychology and how to manage emotions while trading the online forex market a trader can read the forex trading psychology guides from the learn forex trading courses section of this site under the forex key concepts tutorials.