Once you’ve already mastered fundamental and technical analysis, you should start coming up with ways to maximize trading profitability. Some traders are able to achieve this by using forex trading books, working on their trading psychology, or coming up with mechanical systems. For those who don’t want to use up additional resources at first though, here are some simple ways to improve profitability in forex trading:
One way to do this is to adopt correct position sizing. When starting out in trading, we are usually told to risk a constant amount per trade in order to manage risk properly. But when you want to make the most of the setups you are confident about or comfortable with, you can advance your trading performance by increasing your risk responsibly or you can scale down when you think a setup is more risky than usual. For example, taking trend setups could be your expertise so you can increase your position size in these scenarios. If the trade setup is against the trend or if you are betting on a result of an economic release, you can reduce the amount you risk on that setup.
Next is figuring out how to adjust your trade strategy to the changing trade environment. When you started out, you probably took the setups that were aligned to the market sentiment and your plan. However, as you noticed, it prevents you from catching pips when the market environment is different or when it keeps changing. In particular, you can have a trade strategy that uses the ADX or range indicators when the market is moving sideways. Conversely, you can have a trade plan that favors retracements and extensions for trending market behavior. In addition, your trade plan should also make allowances for changes in volatility.
Last is not being afraid to jump in. Traders often wait for better prices or retracements to hop in strong price movements but this can prevent you from being able to catch the trade at all. Learn how to determine if markets will still pull back or not before coming up with an entry strategy. Your observation of past price action, usually the reactions to major news releases, can guide you in figuring out if you should try to hop in the middle of a move or wait for a pullback to a better price.
Take note of these tips that can help you advance your trading career and make the most of the skills you already learned.