We should have known by now how tricky it is to make consistent money or profit trading the forex market. In trading the market, most traders end up losing part or all of their account and give up at the end, the reason for this occurrence in most cases is misinformation. Most people when starting out trading forex come with a “get rich quick” mindset which was given to them from an advert they saw of a forex broker online or offline. They deposit their hard earned money thinking making money in the system is so easy. If making money in forex is that easy then every trader would be rich. I was a victim of this particular type of mindset it resulted in me blowing out my entire trading account at some points. Having a trading strategy and plan alone won’t make you a profitable trader because profiting in trading forex goes beyond that. Forex trading has its psychological aspect; you have to be sound in this area then with a high probability trading strategy to make consistent money in the market. Without much ado let’s get down to business.
6 ways to consistently make money monthly trading forex
- Have a high probability trading strategy: in trading the forex market, it is impossible to have a strategy with 100% win rate because trading is a probability game. When I said “high probability trading strategy” I mean a strategy that puts the odds in your favor.
What you should do once you have the strategy.
There are countless high probability trading strategy out there such as price action which puts the odds of winning in your favor, but how can you a newbie apply this strategy being that you are not yet acquainted with it? To confidently trade a strategy, you have to first try it out on a demo account to see how it will perform and how to execute trades using the strategy accurately.
- Always think in probability: As I said in the previous point, no strategy can deliver up to 100% win rate in forex trading, for that reason, you must always think in probability when placing any trade. What I mean is, whenever you place any trade ensure you put to mind that it can turn out as a loss. Thinking in probability will help prevent emotionally induced trading mistakes. Traders tend to forget about this point when they have winning streaks or losing streaks; any trade can be a loser always remember this.
- Risk to Reward ratio: To consistently make money you have to be able to spot out trades with high risk-reward potential. Risk-reward here means the ratio of your risk per trade to the reward, to make money, a reward of 2 times your risk or more is required. Example, assuming on a trade you are comfortable with losing $20 which is your risk, then your reward will have to be 2 times your risk which is $40 at least to make money. But also remember that the $20 risk must be maintained for every trade you open, it is a constant you should not go above. With risk and reward technique of managing trades, you can have just a winning percentage of 50 and still make money consistently. I can’t tell you how much you can risk, this number depends on every individual’s tolerance.
- Always use stop loss on all trades: To avoid wiping your account in cases where the market goes against you, placing a stop loss is necessary because as I said, you won’t win 100% of the time. Many traders have blown their accounts on many occasions because they fail to place a stop loss on their trades.
- Put your emotions in check and be patient: some trades take time to play out while others don’t, so making money requires you place a trade and let it run until it hits your stop loss or take profit. We tend to attempt at getting back at the market whenever we have a losing trade, the reason for this attitude is because we fail to think in probability which triggers all kinds of emotional responses that can wipe a whole account. The importance of patience cannot be overemphasized; it is a required ingredient in your success trading forex.
- Trade higher time frame: trading too much is not the way to make money in the market but the way to lose and stress yourself out. Higher time frame has signals that are more reliable than lower time frames, and such time frames keep you from trading too much and giving your money to the market. Higher time frames are free of market noise as you can see on lower time frames such as the 1 min, 2 min and more. I trade off the daily chart.
Trading higher time frame gives you the time to do other things alongside not stress yourself. As always, let us know what you think in the comment section. Remember to share the post. Thank you.