Forex trading looks simple but few succeed. A lot of the so called investment wisdom doesn’t work and is given by people who have never traded in their lives.
Here we will give some simple tips that will help you increase your profit potential.
1. Get a simple method you understand
In forex trading many people think that the more complicated a method they use in forex trading the more likely they are to make money.
The fact is however that simple systems work best.
Simple systems are more robust and easier to trade with discipline, as you understand the logic and can therefore follow it with confidence when it has a losing period.
You can build one yourself easily and we have written frequently on this and it’s easy to do.
2. Trade the big trends
Forget day trading (we have written several articles why) it’s guaranteed to lose you money, stick to catching the big long term trends that make the big profits.
3. Work smart not hard
Once you have a system your happy with that’s it. People go on about working hard in forex trading to educate yourself but once you have your system stick with it.
The market doesn’t give you extra dollars for effort, you get your reward for trading correctly.
4. Trade Infrequently
Many traders trade frequently and always like to be in the market and in on the action.
The big moves in FOREX trading, with optimum risk to reward, come just few times a year, so don’t trade for the sake of trading wait for these moves – These are the ones that will make you the big profits and that’s why you’re trading.
5. Money Management
In forex trading most traders can see moves and be right about market direction but they can’t hold a trend.
They get in, get stopped out quickly, then see the market reverse back in the direction of their trade and pile up $10,000 or more and their not in!
The reason for this is traders have not grasped money management. When trading they do the following:
Place stops to close to entry and get taken out by volatility of the market. I have seen traders put stops right at the first support in an up trend and of course they get taken out.
Forex trading is risky, so you need to place your stop far enough away from the market action to allow for volatility.
This is not being rash, but to make money you have to risk it.
Placing stops to close to entry and not taking enough risk dooms most traders to fail - Don’t make the same mistake.
Also when you have a profit don’t move the stop up to quickly, be patient and give the trade room to breathe – The big trends last months or years and to say with them you need to accept short term swings against you.
Its tough watching open profit dip, but keep your eye on the bigger picture and the bigger profits.
6. The key to success
The key to success in forex trading is to do the following:
Apply Simple Method + With Discipline + Calculated Risks = Forex trading success
While it is a simple equation most forex traders don’t do this. There always looking for a short cut or easy way to make money and in forex trading.
So there you have 5 simple tips understand and apply them and rely on yourself and you could make some big profits forex trading.
By Sacha Tarkovsky
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