If there is one thing that forex trading is famous for then it is the fact that there are lots of opportunities for individuals to make a lot of money in the market. What the forex market is not known for is that with as many opportunities as there are in the forex market, the risks are equally common.
Therefore, the skill in forex trading is to be able to distinguish between profitable situations and risky situations on forex charts. Unfortunately, this is also where more forex traders end up making mistakes. In order to help you use the opportunities in your forex charts in the right manner, here are some tips.
Be as Selective as You Can Be
You cannot be faulted for thinking that forex trading, like all other professions, rewards those individuals who are especially hard working and able to put in a lot of time.
However, this is not the case. In fact, if you trade a lot then you are making a mistake.
You would profit in forex trading not because you spend hours on your forex charts but because you are smart enough to pinpoint the right opportunities. This means being selective with the opportunities you use and avoiding overtrading.
Avoid Common Mistakes
Overtrading is a common mistake made by forex traders. There are many other mistakes that are common amongst beginners such as overleveraging, trading on emotions, and even trying multiple strategies without perfecting any single one.
Therefore, you will have to always be on guard against common mistakes and prevent yourself from making them if you want to profit from the various opportunities that show up on your forex charts.
Verify Each Potential Trade
The best way to make sure that you are not misjudging an opportunity on your forex charts is to verify each and every trade before actually placing it in the market. For this, you will have to practise a lot of patience. Verifying trades is best done by waiting for the opportunity to develop even if it means that you will lose out on 30 to 40 percent of the trend.
Define Your Stops And Targets In Advance
Even after you have verified opportunities, you will still end up with a few losing trades. How you deal with these situations is what will decide your long term fate in the forex market.
The trick here is to make sure that you take the possibility of losses into account. Once you take such contingencies into account in your head, you can plan for them by defining your losses and profit targets and using stop loss and take profit orders.
Focus On Support, Resistance, And Breakouts
In order to use trending opportunities on your forex charts, you will have to pay special attention to support and resistance levels in addition to breakouts, whether they are the primary tools for your strategy or not. By focusing on these aspects of your forex charts, you will get a clearer picture of the opportunities.
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