Secrets of Securing Profits in Forex Trading
In forex trading , you must prepare everything well. Trading plan is an absolute thing you must have. That is the first step you must do. I always say that you must have a mature plan. Is the trading plan enough?
For a moment, did you just answer “YES”? No way…. 🙂
The answer is: NO. A trading plan alone will not take you anywhere. “Plan your trade, trade your plan,”. So, no matter how sophisticated and detailed your trading plan will be if you don’t run it. Agree?
But it turns out that trading does not just stop at executing trading plans well. You also have to actively monitor the open position (transaction) that you have made. Remember that the market is very dynamic so you also have to be able to follow market dynamics. Thus, you cannot rigidly say, “I have already run my trading plan. My task is finished. “Imagine you said that in a robotic voice. 🙂
So, what should you do next when you have executed your trading plan ?These are the tips.
In Forex Trading Must Stay Observe the Market
You may be a trader who is very fond of forex technical analysis . You might also have friends who rely heavily on fundamental analysis. Out there, maybe there are also traders who stand in the middle: combining technical and fundamental analysis at once.
Whichever you are, still you can’t deny the fact that news or economic data can affect price movements. The market can change direction very quickly and significantly in seconds in order to respond to news that might have just been released. You cannot say, “I am a technical analyst, no matter the news”, or “US economic data is in peak performance, it is impossible for the USD to weaken”.
Anything can happen. That is why you still have to keep an eye on market developments.
Indeed, in technical analysis, forex is more important to observe the market reaction than to bother finding out what news is circulating. But how do you know the latest market reaction if you don’t see price movements at all?
Stay “connected” to the market. If you are a very mobile person , there is nothing wrong with equipping yourself with a smartphone installed by Mobile Trader . Thus, you will be able to make a decision as soon as you see a “sign” that can threaten your transaction.
Trading plan does not have to be rigid
Come on, don’t be stiff. Even in military rules, a sergeant may resist the order of his lieutenant if he considers that the order will jeopardize the safety of his troops and he has other options. Even military rules can also be flexible.
In forex trading , you must make every effort possible in making and implementing your trading plan . But this does not mean you are free to hit all the rules you have made in your trading plan. Nor does it negate the trading plan . Being flexible is not the same as being careless.
You must be able to make some adjustments if the market changes and of course stay within the framework of your trading plan . An easy example, let’s say you open a short position because you see a symmetrical triangle pattern that has been confirmed on the chart. The price then drops but has not touched the profit target based on that pattern. After some time it turns out the price is moving sideways, never reaching your target. Oversold indications began to appear. What will you do then? Waiting for the target to be reached, or closing the transaction even though the profit is not yet in line with your target?
Remember that the longer you leave your position open the greater the chance that your position will be at risk. So, in the case above, it’s fine if you decide to close the transaction. Why? Because you have objective considerations, not just because you fear your profits turn into losses.
Adjust transactions with market situations
In forex trading, of course you want to always minimize risk. One way you use is to implement a good ” risk-to-reward ratio ” policy, where the risk ( stop loss ) is always smaller than the reward (target profit).
Likewise, that doesn’t mean you can’t modify your transaction. Even though the risk that you will face is definitely smaller than the profit target, you are still allowed to reduce the volume of transactions that you have made.
If the market does not move according to your expectations, but you still believe that your position still has the potential to reach your target, you may reduce the amount of your transaction. For example, from 5 lots reduced to 2 or 3 lots.
Conversely, if it turns out the price moves according to your analysis, try to activate the trailing stop , which is to change the stop loss level to “stop profit”.
In Forex Trading , you should prepare the above things in your trading plan. But if not, it would not hurt to apply it immediately to the open position you have.
Hopefully these tips can help you maintain profits on the transactions that you make, so that the trading plan that you have compiled with difficulty does not end with unexpected losses. Try to apply it.