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How To Start Making Profit with Forex Trading in 2021

  • by Money Life Research
How To Start Making Profit with Forex Trading in 2021

 

There are several ways in which a trader can improve his chances of achieving constant profits in forex markets. Although research shows that approximately 33% of the traders are able to make a profit over a period of 3 months. However, the percentage of traders who are able to consistently generate returns in the forex market stands at 7.7%. So we can say that 92% of the traders are not able to achieve their goals in the forex market.

So, here are some forex tips that will help you to generate constant returns in the market -

#1. Choose a Consistent Trading Strategy

The first step is to choose a trading style in the forex market. There are several options but most of them fall into the following categories -

i)  Scalping

ii) Day Trading

iii) Swing Trading

iv) Long Term Trading

Trading strategy will also depend on the forex signals that you receive in the market. For this, it is recommended to opt for a good forex signal provider.

#2. Set Risk/Reward Ratio to 1:2 or Higher

Traders have no guarantee that they will achieve more than 50% of winning trades. However, one way to address this concern is to set the risk/reward ratio to 1:2 or higher. Take a situation where you are planning to gain 100 pips from a given position. In this case, you can consider setting a stop-loss order below 50 pips of the current market price.

This strategy can be very helpful in the sense that it can help traders to earn payouts even with 40% of the winning trades.

#3. Setting Realistic Profit Targets

Setting risk/reward ratio is important but it might not be enough for forming consistent profits. Another important aspect to earn returns is to set realistic profit targets. This can be done depending on the average daily volatility of currency pairs. For example, EUR/CHF is a pair that can move by 50 to 55 pips. In this situation setting a profit target of 100 pips will be unrealistic.

Take the currency pairs that are volatile if you aim to warm daily returns. But this also means taking a big risk. A good forex signal will help you to understand daily fluctuations in this case.

#4. Avoiding High Leverage

Leverage is a double edged sword. Overleveraged trading can easily lead to several losses that can be difficult to recover. For example, in the case of 400:1 leverage, if the market goes against the opened position by 0.25%, it might be enough to wipe out the entire trade, so a trader will lose his or her entire investment.

Taking appropriate leverage and forex signals will help you to generate constant returns in the market.

Final Word

The worldwide forex market is attractive to many traders because of the low account requirements, round-the-clock trading, and access to high amounts of leverage. Above mentioned forex tips will help you to make use of the forex market and generate sufficient returns.


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