Smart Ways to Succeed in Forex Trading You can generate enormous profits in Forex trading. 12 helpful recommendations will make you closer to this goal. A solid trading plan and awareness about typical errors will contribute to your success. The below list provides you with basic recommendations in this task. 1. Develop your trading plan When a trader expects upraise of market, he usually says something like: “I think than EUR/USD will reach $1.3000. On which level shall I buy?” My reply is - “What is your risk in a trade?" In other words, “Where will you leave if you are not right?” Often a trader is taken aback with the reply. It never occurred him that he could be wrong or at which level he must place Stop. Most part of traders never have a plan. It means they do not know what to do if they are found to be wrong or right. Big profit on paper turns into big loss in real life because they do not know when to leave. Crucial point is to develop your trading plan before you enter a trade. This plan accounts for the following: Know how and where you are going to enter market Know which amount of money you can risk with Know how and when you leave if you are wrong Know how and when you leave if you are right Know how much you would get if you are right Protect your trade with Stop Loss if market moves the way you don't expect Understand about when market reaches your target 2. Use money management strategy Money management is the risk control through protective Stops either hedging which balances profit and loss. You are supposed to have target profit and know your chances to be right or wrong as well as to control risk through protective Stops. It is better to trade with the order in which you can lose 1000 $ if you turn to be wrong and make a profit in the amount of 500 $ when a trade brings profit 8 times from 10 than to make a profit in the amount of 1 000 $ or lose only 500 $ in the trade which works only in 1 case in 3. Develop and test your money management strategy to solve this issue. It is a wide topic, but the key thing you must know is to know your chances for profit as well as a proper profit/loss ratio. 3. Put protective Stop Loss orders This error is caused by a poor trading plan and bad money management strategy. Once you enter a trade, put protective Stop orders – and they must be real, not imaginable. Too often, traders use imaginable orders just because such orders worked in past, whereupon they saw market moves in their direction. If you put Stop order in a wrong place, it means you conduct a fallacious technical analysis. 4. Close profit-making trades on time. A widely spread mistake among Forex traders is that they take minor profits and let their loss grow. It is a usual result when you've no plan. After 1-2 loss trades you will probably take minor profit on the next order even if this order could bring you a big profit that would make up for your past damage. Traders allowing their loss to grow are met even among professionals. You enter a trade and do not know when to leave it. Once you start to lose, you let this damage grow in your hope that market will roll back – a rare case. Use protective Stop Loss orders you define prior to making a trade. 5. Hold position for a reasonable period of time If a trader is not able to take profit on the level defined before, this mistake is often made. Market allows to take profit before it takes more profit back.