Trade Limit
For any given trade, the trader will not lose more than $X. If your last trade losses are greater than this preset amount, then you should determine what course of actions you will take. These actions will likely force you to stop trading for the rest of the day. This means that you should shut down your trading platform FOR THE DAY. You then should determine how the free time well be spent. You might want to re-evaluate the strategy that lead to your loss and make any changes if necessary, and then paper trade until you are certain that the strategy continues to work.
Weekly Limit
For any given trading week, you will not lose more than $X. If your weekly cumulative losses plus your last trade losses are greater than this predetermined amount, then you should decide what course of actions you will take. These actions should probably include terminating the rest of your trading for the trading day and the trading week. Again, you will shut down your trading platform FOR THE DAY and refrain from trading the REST OF THE WEEK. You should then decide on how the free time should be spent. Suggestions might be to re-evaluate the strategy, incorporate any changes if necessary, and paper trade until you are confident that the strategy continues to show a consistent profit.
Monthly Limit
For any given trading month, you will not lose more than $X. If your cumulative monthly losses plus your last trade losses are greater than this predetermined amount, then you should decide what course of actions you will take. These actions should probably include terminating the rest of your trading for the trading day and the trading week and the remainder of the month. You will shut down your trading platform FOR THE DAY, FOR THE WEEK, and FOR THE REST OF THE MONTH. You should then decide on how the free time should be spent. Suggestions might be to re-evaluate the strategy, incorporate any changes if necessary, and paper trade until you are confident that the strategy continues to show a consistent profit.
How Will You Handle Large Losses and Profits?
Your trading capital must be money that you can afford to lose. You need to determine at what point you will bring in more money in the event of a large loss. In addition you'll need to define when you will take money out of your account as your profits increase.
How Will You Determine Your Position Size?
The size of your position should never exceed the limitations listed in your risk management rules. Something you might want to consider is that some strategies might have a high probability of success (e.g. trend continuation strategies) which enable you to adopt a more aggressive position size at entry. Other strategies might have a lower probability of success (e.g. reversal strategies) and your risk management rules may only allow for a more conservative position size at entry. However, once the trade and the new trend are established, you might want to think about adding to the position at predetermined continuation signals. This potentially allows you to increase your position size while at the same time maintaining a very low exposure to risk.
For any given trade, the trader will not lose more than $X. If your last trade losses are greater than this preset amount, then you should determine what course of actions you will take. These actions will likely force you to stop trading for the rest of the day. This means that you should shut down your trading platform FOR THE DAY. You then should determine how the free time well be spent. You might want to re-evaluate the strategy that lead to your loss and make any changes if necessary, and then paper trade until you are certain that the strategy continues to work.
Weekly Limit
For any given trading week, you will not lose more than $X. If your weekly cumulative losses plus your last trade losses are greater than this predetermined amount, then you should decide what course of actions you will take. These actions should probably include terminating the rest of your trading for the trading day and the trading week. Again, you will shut down your trading platform FOR THE DAY and refrain from trading the REST OF THE WEEK. You should then decide on how the free time should be spent. Suggestions might be to re-evaluate the strategy, incorporate any changes if necessary, and paper trade until you are confident that the strategy continues to show a consistent profit.
Monthly Limit
For any given trading month, you will not lose more than $X. If your cumulative monthly losses plus your last trade losses are greater than this predetermined amount, then you should decide what course of actions you will take. These actions should probably include terminating the rest of your trading for the trading day and the trading week and the remainder of the month. You will shut down your trading platform FOR THE DAY, FOR THE WEEK, and FOR THE REST OF THE MONTH. You should then decide on how the free time should be spent. Suggestions might be to re-evaluate the strategy, incorporate any changes if necessary, and paper trade until you are confident that the strategy continues to show a consistent profit.
How Will You Handle Large Losses and Profits?
Your trading capital must be money that you can afford to lose. You need to determine at what point you will bring in more money in the event of a large loss. In addition you'll need to define when you will take money out of your account as your profits increase.
How Will You Determine Your Position Size?
The size of your position should never exceed the limitations listed in your risk management rules. Something you might want to consider is that some strategies might have a high probability of success (e.g. trend continuation strategies) which enable you to adopt a more aggressive position size at entry. Other strategies might have a lower probability of success (e.g. reversal strategies) and your risk management rules may only allow for a more conservative position size at entry. However, once the trade and the new trend are established, you might want to think about adding to the position at predetermined continuation signals. This potentially allows you to increase your position size while at the same time maintaining a very low exposure to risk.
How To Increase Forex Profits 100% in 10 Minutes
This simple exercise will increase Forex profits 100% and works for 99% of all short-term FX traders - stop trading so much - widen out your stops - widen out your profit targets - and only trade in the direction of the trend indicated by 4 hour chart.
1) Stop trading so much
Sure there are no commissions but the spreads are HUGE and believe it or not (well you'll believe it after you do the simple exercise below) the spreads are reducing your profits 100%!
2) Widen out your stops
Initial stop loss should be a minimum of 23 points; I use between 23 and 35 point stop losses for short-term trading.
3) Widen out your profit targets
Unless you think a trade can make you 100 points or more don't do it.
4) Only trade in the direction of the 4 hour chart
The real money is made in the direction of the trend
Simple exercise
1) Download all your trades for the year into an excel spreadsheet (if you don't know how to do this ask your broker for help).
2) Determine the dollar value of the spread for each trade.
3) Sum up the total dollar value of all spreads for all trades and add this number it to your current account balance; this is your spread adjusted account balance.
4) Take your spread adjusted current account balance and divide it by your opening balance at beginning of year; the result will be a percentage change.
5) Take your actual current account balance and divide it by your opening balance at beginning of year; the result will be a percentage change.
6) Subtract your spread adjusted year to date percentage change from your actual year to date percentage change.
7) That number should be 100% or more
8) Take the necessary steps as outlined above (1 to 4) and improve your results 100%
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