9 dirty little secrets of a trend trader

We’ve all heard that ‘the trend is your friend’ – and beyond having a nice rhyme to it, it doesn’t come close to explaining the psychological reality that the trend trader is up against.

One of the surest things in the markets is that trend following strategies work. Whether it’s Turtle traders back in the 80s, or the simplest form of trend trading ever invented – buy and hold!

So why do so many people struggle to produce the expected returns with it?

Because there are some hard truths about trend trading – but once you accept these, then the rewards can be yours for the taking!

9 dirty little secrets of a successful trend trader

1.

No amount of fundamental know-how, news watching or inside knowledge will tell you when a trend will start or finish. The trend trader must learn that what he or she thinks will happen counts for nothing.

The signal is everything.

Markets aren’t entirely rational – which is why we have bubbles and crashes. Pundits and market commentators often stand on the sidelines of a trending market scratching their heads and questioning why the markets are moving the way they are. Don’t try to apply logic to a trend – just follow the signals.

2.

The successful trend trader will have lots of small losses, a few small gains, and a few big winners. Position yourself in the market to make this possible.

3.

Beware momentum oscillators. Overbought and oversold indicator readings can last for AGES when the market has got a good strong trend on.

The trend trader knows not to sell on an ‘overbought’ signal, or to buy on an ‘oversold’ signal.

4.

A good trend-following system, might only win 35% of its trades.

All trading methods take losses, and trend-following ones can lose a lot of trades, so trend followers need to be prepared for this and must practise serious risk-management alongside their opening signals.

5.

Trend following makes perfect rational sense – look at any long-term price chart, and the power of trend-following systems is undeniable – yet psychologically is tough to do (which is why so many traders fail at it).

6.

How far will a trend run? When the market starts trending it will often go much further than anyone expected or than logic would suggest. Along the way, pundits will be shouting that it’s topped/bottomed out. But the trend trader just sticks to his or her rules regardless.

As a trend trader, you’re looking for big moves – the ones that make all those flat times worthwhile. Every time you take profits early, you’re damaging your risk-reward profile, and could be costing yourself long-term.

7.

Don’t get too bogged down in market correlations. Yes, markets will trend together. But correlations will sometimes be tight, sometimes less so. Be wary of getting too exposed in one market or one direction, but don’t assume that because one dollar pair will profit, any other would do the same. The best way to trend trade is to spread your risk across multiple markets.

8.

Don’t sweat about missing out on moves – there will always be pullbacks that will give you another chance to grab a bite of the cherry. Be patient.

9.

What goes wrong for trend traders is failure to cut losses short, and lack of staying power through the flat times.

Markets will trend some of the time, markets will be range-bound some of the time. Depending on the timeframe you trade, you may find yourself sitting on your hands or making little progress for extended periods. When the trends come – the profits will be there.

Trend-following systems have proved themselves to be the most reliable earners, and the simplest methods to manage for a rule-based trader. Of course, no trading method is without its challenges (otherwise everyone would be doing it!) – but if you’re prepared for these challenges, you have what it takes to be successful.

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And finally, if you’re not already signed up for the upgraded Heikin Ashi Master, there’s still time to take advantage of my 20% introductory discount.

This is the technique that has banked 80.1% gains in the first 7 months of 2025, and 89.5% in 2024

This offer must close at midnight on Sunday 10th August, so please act promptly.

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