Is the Trend Really Your Friend?

Ever heard the phrase, "The trend is your friend"? It’s not just a catchy slogan—it’s the foundation of one of the most proven trading strategies: trend following. 

This strategy aims to ride directional market moves without predicting tops or bottoms. You simply follow price, let the market lead, and stay disciplined. 

Let’s explore how trend following works, which tools traders use to follow trends, and why this strategy continues to hold its ground across forex, crypto, stocks, and more. 

What Is Trend Following? 

Trend following is a trading strategy that aims to capitalize on sustained directional moves in the market. When prices make higher highs and higher lows, trend followers go long. When prices make lower highs and lower lows, they go short. 

Rather than predicting when a trend will start or stop, trend followers react to market behavior. The logic? Momentum tends to persist longer than most people expect. 

This strategy thrives on patience and discipline — you wait for confirmation, enter with structure, and let the market work. 

Tools Trend Followers Use 

The strength of trend following lies in its simplicity. Here are some go-to tools used to spot and confirm trends: 

• Moving Averages 
  Moving averages help define trend direction. The 50-day and 200-day are go-to choices for spotting long-term trends, while the 20 EMA is popular for short-term alignment. A “golden cross” — when the 50 MA crosses above the 200 MA — is seen as a strong bullish signal. 
   

• ADX (Average Directional Index) 
  ADX gauges trend strength. When readings are above 20–25, it suggests that momentum is building — and the trend may be worth riding. 
   

• Breakouts 

Happens when price closes beyond a key support or resistance level. It’s a classic way to spot the start of a potential trend — especially when confirmed with volume and momentum. 

How Trend Followers Enter and Exit Trades

Entry: 
Traders typically enter after a confirmed breakout — not just a wick or spike. Look for: 

• Candle close above resistance 

• Rising ADX 

• 20 EMA sloping in your direction 

Exit: 
Trend followers don’t aim to sell the top. They use trailing stops, like: 

• A moving average (e.g. exit when price crosses below 20 EMA) 

• ATR-based stop-loss 

• Structure-based stops (last swing high/low) 

The goal is to let profits run, not cut winners short. 

Example: BTC/USD Trend Breakout 

Let’s say Bitcoin has been stuck in a range between $25,000 and $30,000. Then, on strong volume, it finally breaks above $30,000 and closes higher. 

You spot the breakout, check that the 20 EMA is sloping upward and ADX is rising. 

That’s your cue. You enter long. 

Your stop goes just below the breakout zone, and you ride the trend using a trailing stop, letting price tell you when it’s done. 

You’re not predicting, but responding. 

Why Traders Stick with Trend Following 

Strengths of the Strategy 

• Clear structure: You follow a defined set of rules. 

• Stress-reducing: No need to catch tops/bottoms. 

• Scalable: Works on all timeframes and asset classes. 

• Momentum-based: Lets you ride big moves when they happen. 

Considerations to Keep in Mind 

• False breakouts happen. Always wait for confirmation. 

• Trending markets aren’t always present. In sideways markets, trend following can lead to whipsaws. 

• Discipline is key. Exiting too early kills performance. 

Common Mistakes to Avoid 

• Jumping in too early without confirmation 

• Overtrading during sideways conditions 

• Ignoring higher timeframes 

• Letting emotions override your trailing stop strategy 

TL; DR 

• Follow price direction, not opinions. 

• Use tools like moving averages, ADX, and breakout zones to confirm trends. 

• Let profits run, cut losers fast. 

• Best used in trending, not choppy, conditions. 

If you’re tired of guessing and want a strategy that follows what the market is actually doing, trend following could be your edge.