Currency Trading

By: Monica Hendrix
Most forex traders want big profits and can make them but they don't they either snatch a mediocre profit or take a loss. While all traders can make big profits most fail due to the following problems discussed in this article.

The problem of not running profits is as common a reason for losing, as not taking losses quickly

As the old saying goes - "if you don't run your profits to cover your losses then your going to lose" and generally a forex trading system will only win 25 - 30% of the time so those profits must be at least 4 times larger - just to break even.

Most traders get excited when they have a profit and want to take it, the bigger the profit becomes the more they are tempted to take it - in the end daily volatility is eating into their open equity and they bank it.

What happens next?

They see the forex trend go the way they thought and pile up $10,000, $20,000 or more and their not in!

If you want to make the big profits you must fully understand the logic your system is based upon so you have the confidence a big trend will develop and you will have the discipline to hold it.



While this sounds obvious, most traders try and follow others.

They therefore don't have the confidence in the system they are using, discipline goes out the window and the trade is snatched.

If you understand what you are doing, you then need to take risks and they need to be meaningful ones.

If you want to follow a big trend you, must leave your stop right back at the start of the trend until it develops and daily volatility is way ahead of the entry point and trail your stop up.

But you must NOT trail to close.

Most traders try to restrict risk so much they create it.

This guarantees they will be stopped out. If you make this mistake you will NEVER catch the mega trends and profits.

Once the trend is in motion, trail it on a stop below the 40 day moving average.

While you will give up a lot of profit at the end of the trend - you didn't know where it was going to end anyway so that's no problem.

If you caught just 50% of every major trend you would be rich!

Look at your forex charts and you will see the big trends go on for months or years and you can take a major chunk if you.

Have confidence, the mindset to take a calculated risk and the discipline to follow the trend, even when volatility eats into your open equity.

I often laugh when I hear traders say they got a big profit of 100 ticks, well that's not a big profit - we caught one of 2,000 in the Canadian dollar recently and our biggest is 4,300, so go for these trades and catch the big moves for the big profits.

You can do it and enjoy currency trading success if you want.

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