Casey Stubbs — Winners Edge Trading
Before entering trades there are pieces of information that traders should
possess. Trading is a business that an individual must plan and prepare
for, just like any other business. Trading is not gambling unless you are just
entering blindly without a plan. Every time you enter a trade you should
already what your target price is, what the risk level is, and what strategy
you are using. These three keys that I am going to be explaining in detail in
this article will ultimately be the difference in being successful or being a
complete failure.
- It is important to know the
target level before you enter a trade. The reason this is important is
because you need to know where you are going if you want to be able to get
there. What I mean is that if you have a target you are more likely to
stay in a trade until you reach that target. Most traders get in then the
price moves in their favor and they close the trade for small gains. To be
profitable long term in the Forex market you should have your winning
trades as large as possible and having targets keeps you in your
trades. Some traders open two lots at a time to be able to gain more
profits. This will enable the trader to reach the profit target with one
lot and let the other lot ride for greater profits. Letting your winners
ride is a skill that will enable traders to be profitable long term.
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- Risk management is one of the
most important concepts to understand before becoming a trader. What I
mean by that is that before you ever make a trade you should know how much
risk is involved with that trade. For example lets say your account size
is $1,000 than you should know how much of that total amount you are
willing to risk on that trade. The way to achieve success is to limit risk
to 2 to 5 percent of your total account balance. So in this case $1,000
you should risk no more than 20 to 50 dollars per trade. That will help
your profitability and stop you from blowing your account. One other key
point about figuring risk is to make sure that you have at least a one to
one risk reward ratio. What that means is that if your target has to be
equal or greater than you risk.
- Lastly, when entering trades it
is important to know what strategy that is being used for each particular
trade. If you have a strategy that is proven and that you can use over and
over again that will help you achieve successful trading results. The best
way to develop a strategy is to read and learn about different strategies
and then test the results for yourself. Make sure when you are testing the
strategies that you are following all the rules to each strategy.
- In conclusion, these 3 keys
will send you into profitability and then you can use trading as a way to
earn a living. If you can learn to use these skills in your trading you
will be able to refine your trading to be even more successful long term.
- Filed under General Forex ·
Tagged with Forex Tips