FINANCIAL WATCH: Forex Trading Strategies That Safeguard Your Investments
By Space Coast Daily // September 14, 2018
Watching your forex account grow can be quite encouraging. Nevertheless, to remain profitable any trader needs good forex trading strategies.
A significant percentage of forex traders tend to lose their investments despite their level of experience. Having a trading plan won’t protect your account as long as you don’t have a good money management strategy. Good forex trading strategies will help you protect your funds when you are in a streak of profits as well as avoid losing your investment when losses strike.
Manage your capital carefully
Given the nature of the forex markets, the tables can turn swiftly with good gains transforming into devastating losses. As such, you need to know how to manage your account in the right way. One of the most respected rules is guarding your profits at all times. This implies banking a portion of the profits you’ve generated.
Even if you are sparing 10 pips, you are making progress. While this may sound like a small target, making 10 pips for every 10 trades translates to 100 points in pure profits. Here your focus is to trade with minimum exposure to losses and maintain long streaks of profits. You must realize that you are dealing with your money and while you may afford to lose some of it, you must employ sound capital management measures.
Trail the stops and trade in manageable lots
Trailing the stops calls for intensive work but is one of the forex trading strategies that can give you significant returns. To ensure you are on the right path, set a profit target that isn’t too far away.
To illustrate, if you’ve set a target of 20 pips, the moment you attain the projected profit you should move the stop in order to break even. If you end up with a lower move, you’ll just have to consider this a bad trade and you won’t record any profits. But if it records a higher move, each 5-pip is set aside as your additional profits.
If you want to get more gains you need to form a habit of trading in several lots. For instance, each time you decide to trade say three lots means that you can work with more than one target. Basically, the first target point is closer but the others are further apart which means you can leap better profits.
Final words on forex trading strategies
The amount of profit you will bank as well as how you choose to trail the stops depends on the forex trading strategies you are most comfortable with but it will also be informed by the timeframes for each trade. If you are a long-term trader, setting your targets higher may be a good idea but short-term traders need to maintain a smaller target to avoid consecutive losses.
While successful trading depends on your propensity to learn quickly and understand the markets, you will still be putting your funds at risk. As such, you need to embrace methods that protect all your profits as often as you can.
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