Whether you’re a novice trader or well experienced, there is always room for improvement and for self-critique. With trading, it’s a question of not only racking up the wins, but of increasing their profitability. To realize any measure of success at all, you need to spend time before you begin trading with learning, studying and practicing. And that process should never stop! Find a trading hero, or guru, and follow every move. Sign up for blogs to keep learning and keep track of news events that can affect the market. But those are the basics for staying in the game. If you want to fine tune the way you approach trades so that you can experience more wins, here are three tips.
Tweak Your Trading Plan
Before even beginning to trade, you need to have a trading plan set into place. After doing your homework and studying the market, you need to decide exactly how you want your trades to work. A trading plan will set the rules for what you will trade, when to place and order and when to get out. Study the trading plans of professionals, but keep in mind that trading plans are not a mere cut and paste job. It’s highly unlikely that you can take someone else’s trading plan and use it successfully. Customize your trading plan based on your personal objectives and goals. Because the bottom line here is that you want to increase your profits. If you feel like your trading plan has failed you, go back to the beginning to analyze exactly the points where your plan doesn’t match your stated goals. Make adjustments and keep trading!
Limiting Risk with Stop Loss
Even the best forex traders out there can not predict 100% if a trade will yield high profits. That’s why experienced traders take advantage of stop loss directives. While a stop loss won’t keep you from losing money, it can limit the amount that you lose. The best way to set it is by calculating the risk you are willing to take. If you set your maximum loss at less than one percent of your trade, then that’s the most you can lose. You can figure that the one percent dollar figure is your account risk. Trade risk the is difference between the entry price of that trade and the stop loss price that you set. You can also set a daily stop loss, which will limit the amount of losses you can suffer in one day and still make it back on a more profitable day.
Analyzing Your Trading Journal
Once you’ve spent adequate time studying, learning and practicing with dry trades, it’s exciting to put your first real dollar down in a real trade. But don’t get carried away with your wins and forget to write them in a daily trade journal. By writing down the circumstances around each trade, time of day, the type of trade and its success, you can tweak your trades to be winners.