There are many ways you can plan your strategy for making a profit. The most common ways are you are going to trade with the trend. There are many mistakes that are made by traders when they are trading. They do not know that the market needs room for movement if you want to make money. You can simply give this room by not placing your strategy too tight or by setting the stop-loss at a tighter position. This article will tell you how to give room for the movement. As the beginners place their trades, they are excited about the market and they do not know what to do. As a result, they place trades and close them without giving the volatility that is needed for the profit.
Using too tight stops
The short-term traders in the United Kingdom love to use a tight stop loss. Though it seems a great idea to reduce the risk in reality, you are not giving enough space to your high potential trade. If you observe the chart closely, you will notice a false spike right after a very good trade. At times the market exhibit false spike to wipe out the retail traders using too tight stops. For this very reason, it’s highly imperative to use a wide stop loss so that your trade has enough space.
Using a wide stop loss is a little bit complex. You have to scale down the lot size to limit your risk. You might spot a great trade setup in your trading platform but this doesn’t mean you will be placing big trades. Always remember, the outcome of each trade is completely random. So never think big lot trading will make you a millionaire. Regardless of the quality of the trade setup, you should never risk more than 2% in any trade. This simple rule will always save your investment in the Forex market.
The trends move erratically
The first thing you need to know is there is no pattern in the movement of the trend. They may come and go and this is how you need to prepare yourself. Most of the professional like to place their trades when the trend is in favour. They do not go for erratic movements or signals as it is risky. If you are trading in Forex, try to look out for the natural pattern of the prices. As there are changes in the trend and prices without patterns, you need to plan your strategy that will not get affected by these movements. If you plan a strategy without the erratic moves, your trade may get closed. Try to be wise and think of the future trends. This will help you to design your trades and how you can save your money.
There is high volatility without notices
The traders do not look at the chart much. They only take a look when they are going to place trades. If you are reading this article, this says that you do not know high volatility can occur without showing any signs. The news and information are an important part in predicting the future trends but they are of no help if you do not prepare for unprecedented volatility. Most high volatility can appear out of nowhere and you need to have a backup plan for that. Think of your trade that will close if the trend only moves down 10 pips. If there is high volatility and there was no sign, you could have easily lost your money. Giving the room for the market will save you from losing the money.
The future is unknown
Every trader knows they can lose their money. This is why they are always prepared with a backup plan in Forex. Do not try to make some brave trades because you will lose the trades. Leave your strategy open to possibility and you make money.