In addition to different strategies in Forex trading, another thing that you need is statistics. Like strategies, statistical data is crucial to improve your overall trading performance. Experts believe that 9 out of 10 times, traders should look at data and then decide on their trading plan instead of listening to opinions.
Forex trading secrets that will make you a professional
Over the years, veteran traders discussed numerous strategies about the appropriate time frame, how to put a stop loss and target, whether to hold a trade over the weekend, and various other tricks. Forex Academy, the best website to provide free news and research on the Forex industry offers numerous trading strategies. But if you have crossed the newbie stage, you would want trading secrets that will help you to become a professional. Here are some of the tips from Forex Academy that work:
- Risk of ruin
Gamblers would relate to the risk of ruin concept better because it was first introduced for casino games. Risk of ruin is a statistic or mathematical formula that helps to understand whether you will end up making money or losing it. It considers your overall payoff ratio, which includes your risk percentage per trade, your accuracy percentage, and average return per trade.
The risk of ruin calculates these details based on at least 100 trades. Once you get a comprehensive risk of ruin report, you will be able to understand whether your current trading strategy will help you make money or take your trading account down. The report comes in a chart with payoff ratio and win ratio on different axes. If you have more green boxes than red, it means your strategy is working.
- Durability of your trading strategy
Forex markets mostly remain in flux. This means your accuracy percentage and overall trading performance will also remain in flux. Forex Academy experts believe that you shouldn’t stick to a single strategy for a long time. You can’t make unlimited money in a single day. There is no strategy that works that way. What you need is a profitable trading strategy that operates within a specific range.
So, if you usually have 60% accuracy, your trading strategy will most likely fluctuate between 50% and 70%. That is why your trading strategy should ideally underperform but still have a significant margin for error. That’s called playing it safe.
- Risk management
Consistent risk management is the way forward in Forex trading. You should always know when to stop. Risking less may mean winning less, but risking more means risking more losses. Those who constantly changes their risk percentage per trade they may blow their account up any time soon. However, if you don’t want anything like that to happen, you should always have a fixed risk percentage per trade and a consistent risk management system.
Now that you know the best Forex trading secrets from Forex Academy, make the most of these tips. Have patience in your strategies because this is a waiting game more than anything else.