After learning the necessary skills in forex trading, such as fundamental and technical analysis, the next step is to improve your profitability. Some do this by reading forex books, working on trade psychology, or developing trade systems. However, there are some other ways to improve profitability without having to use additional resources. Here are some of them:
First is to adopt proper position sizing. Beginner traders are often advised to stick to one position size, as part of basic risk management techniques. When you start to advance in your trading career though, you might want to consider upping your risk for trades that you are most confident about or reducing your risk for more risky trades. For instance, if you're comfortable with taking retracement setups or if your trade is going along with the trend, you can increase your position size. If you're taking a countertrend trade or playing a news release, you can reduce your risk to account for the event risk.
Next is figuring out how to adjust your trade strategy to the changing trade environment. When you started out, you probably took the setups that were aligned to the market sentiment and your plan. However, as you noticed, it prevents you from catching pips when the market environment is different or when it keeps changing. In particular, you can have a trade strategy that uses the ADX or range indicators when the market is moving sideways. Conversely, you can have a trade plan that favors retracements and extensions for trending market behavior. In addition, your trade plan should also make allowances for changes in volatility.
Last is not being afraid to jump in. Traders often wait for better prices or retracements to hop in strong price movements but this can prevent you from being able to catch the trade at all. Learn how to determine if markets will still pull back or not before coming up with an entry strategy. Your observation of past price action, usually the reactions to major news releases, can guide you in figuring out if you should try to hop in the middle of a move or wait for a pullback to a better price.
Keep these ideas in mind when trying to work on your trade performance as these simple tips can be crucial in maximizing your profitability.
First is to adopt proper position sizing. Beginner traders are often advised to stick to one position size, as part of basic risk management techniques. When you start to advance in your trading career though, you might want to consider upping your risk for trades that you are most confident about or reducing your risk for more risky trades. For instance, if you're comfortable with taking retracement setups or if your trade is going along with the trend, you can increase your position size. If you're taking a countertrend trade or playing a news release, you can reduce your risk to account for the event risk.
Next is figuring out how to adjust your trade strategy to the changing trade environment. When you started out, you probably took the setups that were aligned to the market sentiment and your plan. However, as you noticed, it prevents you from catching pips when the market environment is different or when it keeps changing. In particular, you can have a trade strategy that uses the ADX or range indicators when the market is moving sideways. Conversely, you can have a trade plan that favors retracements and extensions for trending market behavior. In addition, your trade plan should also make allowances for changes in volatility.
Last is not being afraid to jump in. Traders often wait for better prices or retracements to hop in strong price movements but this can prevent you from being able to catch the trade at all. Learn how to determine if markets will still pull back or not before coming up with an entry strategy. Your observation of past price action, usually the reactions to major news releases, can guide you in figuring out if you should try to hop in the middle of a move or wait for a pullback to a better price.
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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