2 Tips For Bigger Profits With Less Effort Instantly
2 Tips For Bigger Profits, Most traders could benefit from the 3 tips enclosed and if they did, they would become more profitable traders. The tips are easy to understand and apply, so let’s look at them.
The first tip is one, that prevents one of the most common errors which losing traders make which is making to much effort and trading to much, these traders need to learn the 80 – 20 rule.
The 80 – 20 Rule
This rule is simple and in the world of business, simply states that 80% of your profits will come from just 20% of your clients, so you need to concentrate on them. In Forex trading it means that 80% of your profits are likely to come from just 20% of your trades. Most traders think the more they trade and the more effort they make the more money they will earn but this is nonsense – you are simply judged on your profits per trade and that’s it, so cut back your trading and focus only on the best trades.
I know many traders who trade once or twice a month and earn triple digit gains and numerous day traders who make nothing or get wiped.
The big profits are made catching the long term trends so cut back your trading and earn more with less effort.
You hear the so called experts tell you to only risk 2% per trade, so you can diversify but all that means is you will dilute profit potential and not make much at all. Also diversification doesn’t cut risk, if you have one trade it can go wrong and so can three! Also think about this – on a $10,000 account using 2% risk that’s just $40.00 risk per trade!
Your stop is so close, you just get stopped out so by preventing risk you create it, so remember point 1! Focus on the best trades and risk 10 – 20% and be patient, on a small account you have to risk more, to make big gains and its as simple as that.
The two points above, don’t go with conventional wisdom but don’t let that worry you, the bulk of traders lose! So use the above tips, make less effort and more money – try them and see.
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ESSENTIAL FOREX TRADING COURSE
Here I am going to share some simple tricks on maximising your Forex profits. They work – and if you incorporate them in your Forex trading strategy, they will work for you as well. Here they are…
Here are your simple tips for bigger profits and over 25 years they have made me a lot of money and there all simple to apply.
Learn the 80 – 20 Rule
This well known rule is used in business a lot and simply states that 80% of your profits are likely to come from just 20% of your clients and in Forex terms it means 80% of your profits are likely to come from just 20% of your trades.
Most novice traders trade too much and you need to keep in mind you don’t get paid for trading a lot – you get paid for being right! So cut back your trading and only trade the really high odds trades. In Forex trading terms, if you trade less you can actually make more.
Separate Core Capital and High Risk Capital
I personally like to have some fun trading and separate my trading capital into 2 portions. One portion is my core capital and another, is my high risk capital.
If for example, I get a windfall profit or I hit my year end target early, that goes into my high risk capital. This I use for hitting trades harder than normal and I don’t care if I lose it!
In fact, I have found sometimes when you can approach a trade with this attitude it makes a lot of money, as it’s money you don’t worry about it makes it easier to make profits with.
Why Trend Following is so Hard and the Solution
The most critical factor of trend following is not the timing of the trade or the indicator, but rather the determination to following the trend when it’s in motion.
Many traders have excellent forex methods and are right about the long term trends but cannot hold them due to the emotion of fear. So what do they fear?
They fear of losing the profit that they have in an open position is something all novice trader struggle with. The bigger the profit gets the greater the temptation is to snatch it before it gets away. As volatility eats into open equity, the temptation to take the profit becomes too much and the trader banks it.
Of course then the trend carries on the way the trader thought piling up thousands of dollars and he’s not in – his fear and his emotions got the better of him. If you lack the discipline to hold trends and want to be proactive, use the 50 – 50 rule below.
Using the 50 – 50 Rule
This simple rule will make long term trend following easier and in most instances more profitable and its simplicity itself to apply, all you do is this:
You enter the trend and on the first surge you see to overbought or oversold in your favour you bank 50% of the trade.
You then wait for the next bounce against you to support or resistance and you go back to full 100% exposure. You then keep repeating the process.
If you do this correctly, not only will you feel proactive within the trend, open equity dips will be less severe and you will make more from the trend. Its simple and its very effective.
Breaks from Trading
Sometimes it’s good just to have a break from trading. Every 3 months or so just pack up and forget all about Forex. Anything can become boring and stressful and just like you have a holiday and from your day job to re-change your batteries, it’s nice to have a break from Forex trading. When you come back, you will be refreshed and see the markets with renewed enthusiasm.
Bigger Forex Profits
The simple tips above can increase your overall profitability and make your trading more time efficient and more profitable so try them and get more from your Forex trading for less effort.
To be successful and trade forex for profit is like any other profitable business. You must have a trading plan. You need a goal and a strategy for achieving that goal. This is particularly important in the forex investment market which is fast moving with many twists and turns which, for the unprepared can lead to financial disaster. The advertising you see, particularly on the internet, gives the impression of rich pickings and dreams being fulfilled overnight. OK, some people can be lucky but the same applies to gambling. If you liken forex trading to gambling then you will lose money. So how do we establish our goal and develop a strategy to achieve it?
First you need to establish the correct mindset. You must be devoid of emotions such as euphoria, greed, fear and above all panic. By creating a trading plan in advance and being determined to stick to it you are less likely to be tempted to make emotional decisions.
Be realistic with your goal. Don’t set out to make a fortune overnight or even over a few days, weeks or months. The higher the goal, the bigger the risks you will take to try and achieve it. Like any business, plan for a slow level of increasing profits over time.
Establish your boundaries. The most basic being how much money will you set aside for trading. Do not expect to win on every trade. To be successful and trade forex for profit it is simply a matter of winning more often than losing. Do not trade with money you cannot afford to lose. Your position size for each trade must be calculated within this boundary.
Your strategy or trading plan needs to be based around a tried and tested system and your position size will relate to your system. Some systems go for a high number of winning trades but the losses when they inevitably occur are big. At the other end of the extreme, some systems allow for a high number of losing trades where the losses are small but can expect several losses in a row. Most traders will settle for something between those extremes.
Finally, choose your indicators. This is the information and advice you will use with your system. Always use at least 2 or 3 different indicators and only trade when they all point in the same direction.
OK, so how do we develop our strategy? My advice is to paper trade using a demo account for as long as it is necessary to establish a system, trading style or preference which will achieve your goal. Once you are trading profitably with your demo account, you will move into real money trading with a lot more confidence and a lot less likely to be influenced by emotion.
Be prepared to modify or fine tune your strategy over time to increase your level of profitability as you gain more experience and acquire more knowledge but NEVER EVER change anything during an open trade. You must open and close a trade on the same strategy.
I sometimes liken forex trading to playing poker. Poker is one of the few ‘gambling’ games which can be profitable if the player has a rigid game plan. A successful player will expect to lose sometimes and knows what his potential gains and potential losses are at every stage of the game and will bet accordingly. A good poker player with be calm and play without emotion and the same goes for a good forex trader.
This is a very brief overview of the need to develop a trading plan in order to trade forex for profit and hopefully will make you feel more comfortable about proceeding further.