In trend trading, the goal is to jump on a trend when the direction is clearly indicated by technical tools and then to ride the trend as long as it continues. For this technique you'll have to know trendlines, trend channels and moving averages.

Trends and Trend Channels

Trendlines and trend channels are the most commonly used technical indicator in the Forex market. They are usually employed to find breakouts entries, pullbacks, prudent stop losses and optimal profit targets. They have withstood the test of time as one of the most profitable trading strategies. Drawing trendlines is simple, just connect the dots. Draw lines connecting the lowest points that the price reached on the current chart, as well as connecting the highest points of the price reached on the current chart. This will form a channel that the price moved in. The channel is slanting upwards then you're in an uptrend if it is slanting downward you are in a downtrend, and finally if it is relatively flat you are trading in a range. Simple enough right?

Trends tend to continue for a long period of time in the forex market.  So it is very useful to be able to spot them quickly and take advantage of them. The uptrend below lasts for a month and if you had caught the wave you could have netted well over 1000 pips.  At 10 dollars a pip on the Euro/USD that's a nice 10,000 dollar trade for a single 100,000 currency lot.

Uptrend on a daily chart:

Downtrend

Moving averages

Moving averages are basically averages of the price over time. To get a 20 day moving average, you add up the price the last 20 days and divide by 20, this is called a simple moving average. These moving averages are lagging indicators, however, so you can not use them to anticipate a trend, only to recognize one. Moving averages do an excellent job of describing a current trend but they lack the ability to signal a change in trends. When you're watching moving averages is important to look for crossovers. For example if the shorter moving average crosses above a longer moving average that can be considered a buy signal. For this technique, you only need to know how to read a simple moving average. To signify a proper uptrend or downtrend the 10 day, 20 day, and 50 day moving averages should be lined up and not crossing. You'll notice on the chart below, the point where the SMA2 line crosses the SMA3 line on May 20th would have made an excellent entry point for this uptrend.

Is important to note that the simple moving averages will often act as support and resistance for a currency. Take a look at the daily graph below where you'll notice  that the price will recede to the moving average for 5 straight sessions but then will faces support, until we have a breakout to the downside.

Homework Trade:

Try to identify trends in the currency that you are currently following. How long has it been trending for, is it in an uptrend or a downtrend or a range? If you find a strong trend, wait for the price to cross the 10 day moving average and then rise off of it then buy one lot. Set your stoploss at 20 pips below the moving average. What you will do is follow the price up. As it rises, raise your stoploss.