How Can I Maximize Forex Profits?
Forex trading is fast becoming the most popular way of earning extra money from home this century, however seldom people know how to maximize their profits and limit their risks effectively enough that they get an 80% success rate. One of the biggest reasons for failure in the forex markets is being in profit at one point in the trade then seeing those profits and more disappear. It is not greed that is the cause of this, but simply not manipulating the stop loss in a way to maximise your profits and limit your losses.
The forex market like other markets moves in waves, and it is successful traders that use the new highs and lows of these trended waves as entry points and profit targets in there trading. It is proven that one of the safest ways to trade the forex market is to take a slice out of an already confirmed trend by entering on its upward or downward push. It is then the manipulation of the stop loss to lock in profits a limit risk that is going to see success in the long term.
As an example of this method I am going to use a scenario of the GBP/USD breaking through a resistance level for a buy trade. The GBP/USD has just broken through a strong resistance level of 16000; you set a buy entry point of 16011. Once your buy entry level has been triggered the trend continues on a 20 pip push then starts to stall or slow down around the 20 pip profit margin.
Now is the time to make the decision on whether you take your 20 pip profit or risk the trade reversing back and taking out your stop loss before continuing in the right direction. It doesn't have to be as straight forward as taking out all your profits as once, in fact professional traders seldom do.
Going back to the example of the GBP/USD, you are now 20 pips in profit. Do you stick with the trade knowing that it will probably retrace before it puts you in profit again or do you take your 20 pips profit and then be disappointed when you see the trend continue 100 pips in the direction you are trading. The answer is you make the most of both worlds, you take out 80% of your profits at the 20 pip margin and leave 20% running, but you move your stop loss up to your entry point. The scenario is; if you trade at 10 a pip you have just made 160 profit you know have that 160 locked in with an additional risk free trade running at 2 a pip, if that trade continues running on a long term basis you can leave your stop loss where it is and look to bag 100's of more pips at no risk. The worst case scenario the trade reverses back through your entry level and you only take the original 160 profit.
Article Source: FxTradingStock.com
About the Author
Adam had been trading forex for years with little success. Adam, at first had no knowledge of the forex markets so hesigned up to Colin Atkin's selected members club. Colin is a professional trader who shares his trading live, all you have do is watch & copy what he does and take the proceeds. Since Adamsigned up to Colin he has had the cash to invest in other projects.
by: Adam Woods
Total views: 76
Word Count: 493
Date: Sun, 4 Apr 2010
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