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What is trend following in forex?

Trend following is a strategy that seeks to capture profits by trading in the direction of the prevailing market trend. Traders identify trends using tools like moving averages, trendlines, and higher-high/higher-low structures. The goal is to enter when the trend is established and exit only when signs of reversal appear. For example, buying when price is above the 50-day moving average and higher highs are forming. Trend following works best in strong, directional markets and can generate significant gains by letting winners run. However, it struggles in sideways or choppy conditions where false signals occur. Risk management is essential, with stop-losses placed below recent swing points. Many successful traders adopt the trend-following philosophy that “the trend is your friend” but combine it with filters to avoid whipsaws. Patience and discipline are key, as trends can take time to develop but offer some of the best long-term opportunities in forex.