Many forex traders often switch trading methods to get a suitable forex trading strategy. Many of them will look for strategies that will produce consistent profits over the long term amid various market conditions.
New traders usually fail to realize that a new trading strategy is not the answer. In fact, with a few systematic and gradual modifications that are adjusted to your trading style, experience level, and personality are more likely to improve your trading results.
Check out these simple ways to improve your trading results:
Don’t open position too often
First of all, you need to know about one thing that costs you in trading, that is, spread. The broker where you trade may indeed not take a commission, but still, there are spreads (which for some pairs can be quite large) that spend your profit. Every time you open and close a position, the more often you are exposed to the spread fee.
Thus, you shouldn’t open-close positions too often to save the cost of this spread. If you feel the trend is still strong and in the same direction with the position, but want to secure the profits that have been obtained first, it’s better to just slide the stop loss. This will be better than closing one position then opening another position in the same direction.
However, you need to review this first suggestion if you are trading through an IB and get a forex rebate from every time you open a position. In cases like this, you need to consider the rebate income per transaction with the spread you must bear.
Widen the Stop Loss
Theoretically, the wider the Stop Loss, the higher your chances of getting a profit. The narrower the Stop Loss, it means that you only give a narrow opportunity for the price to sway before following the major trend that you have identified. In other words, if you use too little Stop Loss, you will lose more often. Thus, give enough space to shake this price so that your Stop Loss is not too easily touched.
According to Investopedia, traders should evaluate their own risk tolerances to determine stop-loss placements. As a benchmark for short term trading, Stop Loss should range between 23-35 points. However, you must keep in mind that ypu should set Stop Loss at the amount of loss that you can bear. Besides, you cannot trade without a stop loss, because after all, you need a stop loss to limit the possible losses.
Do the analysis, not based on instinct
Do not open positions, unless you surely can get a profit of 100 pips or more. Moreover, open positions are only based on your instincts, without any analysis.
Remember that your profits will still have to be cut by spreads, and you already bear the risk of loss by opening one position. So, don’t want to just based on instinct.
Use 4H Time Frame or more
Many traders think that Time Frame 4H is the lowest false signal. Also, if you expect to get 100 pips more profit, then using a chart with a relatively high Time Frame will make more sense to make it easier to identify the major trend that is happening.
Those are simple ways to improve your trading results. The point is actually how we deal with spreads as much as possible which reduces our profitability. Have a try and good luck, traders!
Read more: How Does Foreign Exchange Work?
