TIPS: MAXIMIZING PROFITS OF FOREX SYSTEMS
1. Define Simple Forex Trading Rules and Follow the Trend
The simpler the forex trading system is the better. If the forex trading system is too complicated, it will be very difficult to stick to the trading rules. Complicated forex systems are also very confusing. A simple forex system makes it easy to follow the trading rules.
2. Eliminate Risk Quickly and Let Profits Run
Minimizing risk is far more important than making money. Our first objective in forex trading is to make the trade less risky. We do this by entering only high probability trade setups, setting stop losses, cutting losses quick and never average down, and letting the profitable trades run for a while, just long enough but not too long so as increase the profits. Profitable trades are only kept open as long as the forex trading system shows the trend is in place, these transactions should be closed immediately once your exit signal criteria is generated by the forex trading system.
3. Choose the Right Forex Currency Pairs
Once you have your trading system, you will want to start testing it on a demo account. Currencies have their own characteristics different from others. EURUSD, GBPUSD USDJPY, USDCHF are ideal. A forex trading system will give different results for each forex currency pair.
To maximize the profitability of your trading system find the most active forex market hours for a chosen currency pair and trade during that market session only.
4. Use Forex Money Management Rules
Always risk less than 2% per trade transaction. With compounding, you will be surprised to see how quickly your Forex account grows once you start to trade with a profitable forex trading system.
5. Keep a Forex Trading Journal
Keeping a log of all your trades will help you to become a better and better and will help you follow the trading rules of your trading system. A forex trading journal will also keep track of your profitable trades and losses and you can analyze why a trade setup was profitable and why it was not.
6. Set take Profit Targets
Establish a daily, weekly or monthly profit targets when trading the forex market. Once you hit this target. This will stop you from over-trading and will also stop you giving back your profits the forex market. Keep your reward to risk ratio high, a 3:1 reward to risk ratio is best. This means opening trade transactions only when you have the probability of making three times what you are risking.
Example of signals generated by our Forex trading system
Example 1: Buy Signal and Sell Signal Generated By Forex Trading System
Buy signal is generated by the indicator based forex trading system, then an exit signal is generated before another reverse sell signal is generated on this forex chart
Example 2: Two buy signals generated by Forex Trading System
Two buy signals are generated during the upward trending market
Example 3: Exit Signal Generated by Forex Trading System
Examples of Forex Trade Signals Generated by a Forex Trading System
Learn Forex Education
The first tip is to learn about the Currency Exchange Market (Learn Forex Lessons), those who don't learn the required forex trading knowledge from the various forex trading tutorials online will not improve their forex trading results no matter how many tips they have read. By not learning forex trading, these traders will keep making the obvious mistakes made by forex trading beginners without even realizing what they are doing, Forex is a wide topic and in order to make profits a trader will have to learn forex trading first.
Get a Forex Trading System
A Forex system is a must for every forex trader, a trading system is used to determine what forex trading decision to take. A forex system gives a trader an edge over others who don't have a forex trading plan. A good forex plan is one that is back-tested and proven to produce profitable trades. After coming up with your trading system you should back-test it on a Demo Forex Account.
Learn Forex Money Management
Learn about The Various Forex Money Management Lessons, don't attempt to trade the online forex market if you do not have forex money management rules. The 2 forex trading management lesson that you must learn are:
Learn about Forex Leverage and Margin
If you don't know what is forex leverage and how it works and how it can affect your forex margin, then you will not make any money in the foreign exchange currency market and you will lose your money in the forex market.
Have a Written Forex Plan
A forex trading plan will take into account all the above forex trading tips and summarize them within one document that you can use to trade the online forex market.
The first goal should be taking your time to really determine what your forex trading goals are and how much money you wish to make. Once this is determined then the following three suggestions will help you on your way to start Forex Trading. It is essential to keep all the three goals in mind when executing all of your trade transactions but at the same time this is not a black and white guide to forex trading success.
The first thing is to remember that you really need to work with short term trades until you become profitable and know how to properly monitor these trade transactions. You should trade forex short term because this way you can monitor your forex trading positions and quickly close any forex position whose trading signal setup reverses. In order to truly benefit from the forex trading system you have to be willing to take up the effort to watch the forex market to see exactly how long you can keep your money invested in the online forex trading market. Making short-term forex investments will help you to monitor your trades and control all the risks, do not leave forex trading orders open when you are away from your computer or when you are going to sleep, close all trade transactions and only open forex orders when you can monitor them.
Although it is very important to increase the amount of trades that you are investing each time that you trade - some forex trading guidelines should to be followed. The general rule of forex trading tends to be never to trade more than two percent of your total forex account equity. This of course makes sense when you have a lot of money in your account but what if you only have a couple of hundreds. Two percent of $10,000 equals out to be $200. Even though it is safer to follow this rule it really does not make a lot of economic sense with smaller forex accounts. If you are investing on Forex this is when leverage kicks in to effect and makes all of the difference. In General the more forex trading capital you have to invest the better in terms of forex money management.
The final suggestion is taking a bit of time to make sure that you get all of your forex details correct before opening any one trade transaction, this will be the best method. Keep it simple makes just as much sense in Forex trading market than anywhere else. Although this may require more time and effort to build up your forex trading profits it will save you money in the long term.
Trying to keep your thinking as clear as possible will make your forex trading journey easier but knowing when to break from the norm is also important. Moving towards the right path will make success that much more easier to obtain and by learning all of the steps and logic you will be able to continue making profits. Forex is not hard to learn but a lot of traders lose money quickly because of not taking the proper steps in preparation and learning.