Once you've already mastered fundamental and technical analysis, you should start coming up with ways to maximize trading profitability. Some traders are able to achieve this by using forex trading books, working on their trading psychology, or coming up with mechanical systems. For those who don't want to use up additional resources at first though, here are some simple ways to improve profitability in forex trading:
The first way is to consider adjusting your position size. When you start out as a trader, you are usually advised to risk a specified constant amount in proper risk management. However, when you start to step up your trading game, you should start thinking about adjusting your risk per trade to your level of confidence or the amount of risk entailed in the trade. For example, if you're taking a trend setup or if retracement scenarios are your expertise, you can up your position size on that particular setup. If you're jumping against the trend by picking tops or bottoms or if you are trading a news release, you can half the amount you risk in your account.
Second is learning how to adjust your trade strategy to the market environment. Newbie traders often take trades only when market sentiment aligns with their trade strategy, but it might be better for your profitability to have different strategies appropriate for various market environments. When markets are ranging, you can use indicators that detect ranges or potential breakouts. When markets are trending, you could favor Fibonacci retracement and extension levels. You should also have potential adjustments for increased or lower volatility.
Another way to improve profitability is not being afraid to jump in strong moves. We have usually been trained to wait for better prices or retracements instead of going long or short in the middle strong price movements. There are instances though when you probably noticed that this prevented you from catching the move at all. By being able to predict if the market will still retrace or not can help you improve your entry strategy. You can do this by observing previous price movements, maybe during the outcome of major news releases, in order to get a feel if the price usually retraces to better entry levels or if you will get left behind on a strong move.
Keep these ideas in mind when trying to work on your trade performance as these simple tips can be crucial in maximizing your profitability.
The first way is to consider adjusting your position size. When you start out as a trader, you are usually advised to risk a specified constant amount in proper risk management. However, when you start to step up your trading game, you should start thinking about adjusting your risk per trade to your level of confidence or the amount of risk entailed in the trade. For example, if you're taking a trend setup or if retracement scenarios are your expertise, you can up your position size on that particular setup. If you're jumping against the trend by picking tops or bottoms or if you are trading a news release, you can half the amount you risk in your account.
Second is learning how to adjust your trade strategy to the market environment. Newbie traders often take trades only when market sentiment aligns with their trade strategy, but it might be better for your profitability to have different strategies appropriate for various market environments. When markets are ranging, you can use indicators that detect ranges or potential breakouts. When markets are trending, you could favor Fibonacci retracement and extension levels. You should also have potential adjustments for increased or lower volatility.
Another way to improve profitability is not being afraid to jump in strong moves. We have usually been trained to wait for better prices or retracements instead of going long or short in the middle strong price movements. There are instances though when you probably noticed that this prevented you from catching the move at all. By being able to predict if the market will still retrace or not can help you improve your entry strategy. You can do this by observing previous price movements, maybe during the outcome of major news releases, in order to get a feel if the price usually retraces to better entry levels or if you will get left behind on a strong move.
Keep these ideas in mind when trying to work on your trade performance as these simple tips can be crucial in maximizing your profitability.
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Want to find out more about forex profitability, then visit Katherine Mendoza's site on how to choose the best trading profits for your needs.
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