Allow Your Profits to Run, But Cut Your Losses Short
When you start with a small amount of lots and a stop loss you will be cutting your losses short. Then when the trade goes in your direction you will be able to add on to the trade and let it run. Thus cutting losses and letting profits run.
When you are new to the currency market, this is a hard thing to do. The best thing to do is get a set of indicators that you like to work with and learn to trust them.
One good exercise is to take the price bars or candle sticks off and just trade when you see a signal from your indicators. This will not give you the maximum amount of profit from a trade, for the bars and candles do help, but you will start to learn to trust your indicators.
If A Sell Signal Fails, It Becomes a Buy Signal
Likewise, If a Buy Signal Fails, it becomes a Sell Signal.
A signal that says get out of the market is a potential signal to enter the market going in the other direction. To do this you need to be able to read entry and exit signals as well as know when it is the end of a trend.
When you get out of a good trend then you need to be looking for a trade in the other direction. I would suggest that you wait until you get good strong signals to make the direction change. It could be a consolidation or a retracement. If it is a retracement, then you can get back in going with the trend once again. You may have sacrificed a few pips, but it is worth the loss to have the lack of risk. If it is a consolidation, then you may want to be out of the market until you get good signals telling you which way the market is going.
With a good set of indicators you will not worry much about getting in and out of the market. You can wait until the trade comes to you no matter which currency it comes on.
Up & Down Market Patterns are Always Present
Happy New Year! This year I hope to help many more people be succesful in the Forex Market. Here is a tip that will help you maximize your profits, if followed correctly.
Up market and down market patterns are always present, with one being more dominant than the others in the direction of the major trend.
Loss is a part of trading. As you have heard, you need to control your losses and let your winners run. I like to start each trade out small then when the trend develops load up on the trade. This way I could loose 20-30-40 or even 50 pips before I hit the trend. But when the trend takes off, I add on 2-3-5 or more lots in the direction of the trend and make 3 to 5 times what I could have made.
I have heard traders say they like to put on 3 lots at the beginning of a trade then close one lot at a time to lock in profits as the trade progresses. This gives you the highest exposure in the beginning of the trade and you cut your winner short by closing a portion of the trade when it is going in your direction. When you do not hit the trend then you loose a larger amount.
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