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:
One way to do this is to adopt correct position sizing. When starting out in trading, we are usually told to risk a constant amount per trade in order to manage risk properly. But when you want to make the most of the setups you are confident about or comfortable with, you can advance your trading performance by increasing your risk responsibly or you can scale down when you think a setup is more risky than usual. For example, taking trend setups could be your expertise so you can increase your position size in these scenarios. If the trade setup is against the trend or if you are betting on a result of an economic release, you can reduce the amount you risk on that setup.
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.
Lastly, do not be afraid to jump in strong moves. We often wait for retracements to catch big moves at cheaper prices but this sometimes keeps a trader from actually being able to take the trade at all. If you are able to figure out that the price will still pull back, you can stick to this retracement strategy but you should also be prepared to jump in at market if you think price will just continue in a strong direction. Taking note of past price reactions to market catalysts can be a helpful guide in determining if price usually pulls back or if it will just continue in one direction without looking back.
Take note of these tips that can help you advance your trading career and make the most of the skills you already learned.
One way to do this is to adopt correct position sizing. When starting out in trading, we are usually told to risk a constant amount per trade in order to manage risk properly. But when you want to make the most of the setups you are confident about or comfortable with, you can advance your trading performance by increasing your risk responsibly or you can scale down when you think a setup is more risky than usual. For example, taking trend setups could be your expertise so you can increase your position size in these scenarios. If the trade setup is against the trend or if you are betting on a result of an economic release, you can reduce the amount you risk on that setup.
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.
Lastly, do not be afraid to jump in strong moves. We often wait for retracements to catch big moves at cheaper prices but this sometimes keeps a trader from actually being able to take the trade at all. If you are able to figure out that the price will still pull back, you can stick to this retracement strategy but you should also be prepared to jump in at market if you think price will just continue in a strong direction. Taking note of past price reactions to market catalysts can be a helpful guide in determining if price usually pulls back or if it will just continue in one direction without looking back.
Take note of these tips that can help you advance your trading career and make the most of the skills you already learned.
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