Think you’re ready to expand your forex trading horizons? I’ve got a few tips to help you take your game to the next level pronto!
First things first: find out what level you’re currently on!
Are you in the major leagues? Or are you still in the pee wee leagues? Before you can move on to the next level, you need to find out what level you’re currently on.
You can do this by reviewing your forex trading performance. I can’t stress enough how important keeping a trade journal is… and the more detailed, the better!
Having a record of you past trades will allow you to look back and review your past performance, which will reveal a lot about your trading abilities and inabilities.
It can help you determine your most frequent, most profitable, and least profitable forex setups. More importantly, it can tell you how well you stick to your trading plans and how you react to different trading scenarios.
Remember, it is only when you have a good understanding of your strengths and weaknesses that you will be able to take the next step to improving your game.
Tip 1: Work on your ratios.
You can increase your forex trading returns by either improving your win rate or improving your reward-to-risk ratio. Just be careful not to sacrifice the quality of your trade setups! If improving your reward-to-risk ratio means having to use unreasonably tight stops that lead to a horrible win rate, then it might not be worth making the change.
You have to strike a balance between the two. If you want to improve your reward-to-risk ratio, you must do so without harming your win rate too much. On the other hand, if you want to increase your win rate, you must not sacrifice your reward-to-risk ratio to the point that the net effect is a decrease in your trading returns. You will eventually find that balance through lots of trial-and-error and doing your trade reviews.
Tip 2: Keep up the good work.
Believe it or not, some of the biggest improvements in trading can simply come from sticking to what works.
Using trade journals and self-reflection, try to identify the strategies and behavioral patterns that help your forex trade performance. In other words, do more of what works and less of what doesn’t. Sometimes the simple acts of making less mistakes and promoting good trading habits can have a huge impact on your bottom line.
Tip 3: Expand your trading skills.
If you feel that you have already mastered a core set of trading skills, then maybe it’s time to stretch and expand your skills. Again, your new skills don’t have to be too far from your comfort zone.
Acquiring a new set of skills can be as simple as trading a different currency pair or trading a different time frame. And if you’re feeling more adventurous, you can try out a whole new trading strategy altogether.
The point of the exercise is for you to add new weapons to your trading arsenal. This way you’ll be able to sustain your trading advantage or even acquire new ones.
When it comes down to it, the trick to taking your trading to the next level boils down to the amount of discipline and hard work that you’re willing to invest. In forex trading, you need all the advantages you can get if you want to keep up with the major market players. And as we know, the industry can be unforgiving to the unprepared. So how far are you willing to go to gain or sustain your edge?