Your Forex Trading System: 3 Ways To Make It More Profitable
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All Forex traders are looking for a profitable Forex trading system. We want something we can follow with predictable results. And as no system can be 100% accurate… we want a trading system that is profitable… one that makes it worth our time trading.
But once we find a Forex Trading System that works… we tend to stop looking for ways to make it even more profitable. I understand the hesitation… making changes could cost you winning trades and money. So, once the profitable system is found, traders trade that system without wondering if the system could be improved.
While coming up with a winning trading system is no small feat, how do you know you are trading the most profitable way? You don’t, unless you test! The purpose of this article is to give you three things to look at that could make your trading more profitable.
Look At Your Forex Trading System Stop Loss
You should always trade with a Stop Loss. If the market changes direction, you need a safety net to keep the losses in control. But a tight Stop Loss that keeps your potential loss really low might be keeping your from a higher percentage of winning trades.
The trick is to find the “sweet spot” when placing your Stop Loss. Pay attention to the currency pair you are trading as well as the Chart (M15, H1, D1, etc), you are trading. Then you need to test different Stop Loss ranges to look for the one that lets the trade develop without stopping you out of the trade prematurely, but that also limits risk. Again, the only real way to find this “sweet spot” is to test.
Look At Your Forex Trading System Take Profit
The way you decide to EXIT the trade is just as important as entering and managing the trade. If you want a high win rate, you can set your Take Profit close to the entry level… but that is not the most profitable way to trade. Again, there will be a “sweet spot” according to the currency pair and chart time.
Imagine if you can get an extra 10 pips of profit for each winning trade without reducing your winning trade percentage. Just think of how much MORE money you make with the SAME trades. While your take profit targets should be reasonable, don’t leave money on the table.
Look At Your Forex Trading Systems Money Management
Even a trading method with a high winning percentage can lose you money if you don’t know how to manage your money. And really, your money management should be based on your Stop Loss, Take Profit targets and risk tolerance. First, you need to figure out how much of your account balance you’ll risk on each trade. Then you need to determine a LOT size that fits with your stop loss and take profit strategy.
Once you have a trading system that hits the “sweet spots” with a solid money management plan, you can rest assured you are getting the most out of every winning trade… and controlling your loses. But if there is one thing you should take away from this article it is that just because your system may be profitable… it does not mean it can’t be improved! And each little improvement means a lot more money for you.
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