Trading the forex market is almost impossible for most people, but why is this? It is a well know fact that 95% of traders fail. I know I could increase your chances of success dramatically by changing two simple things in your trading. Would you like to know what they are? Then read on.
1. Risk Reward Almost all traders want profits, in fact they want it so bad they are willing to risk far more than they gain to get it. Do you do this? It is a very serious problem that will drastically reduce your chances of success in the long run.
Lets look at some examples.
If we risk 60 pips to get 20 pips then we must have 75% winning trades just to break even!
If we risk 60 pips to get 60 pips then we must have 50% winning trades just to break even!
If we risk 30 pips to get 60 pips then we must have 33% winning trades just to break even!
If we risk 20 pips to get 60 pips then we must have 25% winning trades just to break even!
Do you see how you are setting the odds against you? You should always try to shoot for at least twice what you risk on each trade if not three times. This puts your chances of success far higher in the long run.
2. Trade With The Trend
I'm sure you have herd this many times before abut how many of you actually do this? Trading with the trend will not only set the odds of the trade being a success in your favor it will also get you out of trouble if you get into the trade at the wrong time.
Try to keep an eye on the trend of the larger time frame while you trade only take trades in that direction on the lower time frames.
Conclusion Using these two simple tips you have already placed yourself far ahead of the 95% that fail in this business. Remember to always keep in mind the longer term goals and avoid thinking about the day to day results.
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