Forex trading can be a very profitable activity for those that spend the time to gain some education on the subject and get a bit of training and experience in paper trading. The art to being able to succeed in Forex trading is the art of maximising your profits and limiting your risks.
It is important to get to know the forex market and how it moves in waves, once this is understood then one can pinpoint profit taking areas and areas to place their stop loss. Over years of trading it has become apparent that profits in the forex market although can be abundant can also disappear very quickly so limitation of your risks is one of the most important aspects of trading.
A simple method of trading that is used throughout the day to maximise profits is very simple. Once you enter a trade and are 10 pips in profit move your stop loss up to your entry point straight away. You are now in a risk free trade. Once you have achieved this you can maximise profits by following the trend in whichever way it is moving and bringing your stop loss down to just above or below the swing back points. Each time you will be locking in profits, at some point that trend will inevitably reverse normally off a pivot point or a psychological number it is at these point you should look to take the maximum profit.
When trading in larger increments and this one is my favourite. If you are trading £10 a pip and you enter a trade and come 10 -20 pips in profit take 80% of your profits out, that way you can leave a larger stop loss and you will never lose. The very worst case, if you have a 30 pip stop you will only make £20 if you take 80% profit at 10 pips and the trend completely reverses. The best case being that your 20% could run into 100′s of pips profit over a longer term trend.
By: Adam Woods