Forex Trading - 2 Simple Tips to Dramatically Increase Profits

By: Sacha Tarkovsky

Enclosed you will find 2 simple tips that will help you increase your profitability dramatically and they can be incorporated in any forex trading strategy. These tips are not commonly accepted by most traders but as 90% of traders lose, we wont let that worry us!

Let's look at these two simple tips and why they increase your profits.

1. Don't Diversify

If you don't risk much you won't make much and that's a fact.

If you have a small trading account all diversification does is dilute your profit potential. If you trade a small account don't spread your resources to thinly - when you see a trade go for it and hit it with as much cash as you can afford.

You hear a lot of forex guru's saying you should risk 2% per trade well, if you have a $10,000 account that's $200.00! If you risk a small amount, you will end up getting stopped out to soon and never catch a major move or profit.

Risk 10 - 20% and be very selective with your trades. Patience is the key, only trade the really high return low risk trades.

Forex trading is all about taking calculated risks at the Right time - if you don't like taking a risk find another profession.

2. Hold Your Stop Back

This leads on from the above point.

You already know that you have to risk meaningful amounts to make a lot and it's a fact that most traders try so hard to avoid risk they actually create it.

They wont risk much as we discussed in point 1 and the most common group who do this are day traders, their stops are so close they are almost guaranteed to be stopped out.

The other critical error traders make is they move stops too quickly to lock in profits, as the market moves up.

The Result?

They are simply clipped out by normal volatility and bank a small profit.

Of course, the trade then continues the way they thought and piles up thousands or ten of thousands in profit and their not in!

Get used to holding your stop back, so that you are not clipped out by random volatile reactions.

This takes courage and conviction and most traders can't do it. Sure they want big gains, but they simply can't hold a big profit, as they get to excited or worried it will get away, so they bank early.

Hold the longer term trends and hold your stops back and work with a profit target to liquidate.

Dont Be Scared Of Risk

If you are, stay away from forex trading.

The fact is that most traders are terrified of risk, that's why they only risk small amounts and can't hold a profit. There risk control is so conservative, that they give themselves no chance of making meaningful gains and their risk control simply ensures they lose.

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