How To Trade Blog: May 2021

Sunday, May 23, 2021

How To Increase Your Win Rate In Forex Trading

If you are feeling drowned in failure by Mr. Market, it is most likely just because you are not really trying to learn the right way to trade forex. This is not about how the market beats you, it is you who is “hitting” yourself. To have a high win rate in the forex market, you really just need to cultivate and overcome yourself.

Trading foreign exchange (or securities) is a very lonely job. You are not competing with anyone at all. Whether you make money or lose money, it is all about you.

How do we increase the win rate in Forex trading? If you are a trader with extremely good money management skills but trading too much, I’m afraid that you will lose money in the long run.

If you are a patient trader waiting for really good opportunities but risking too much money on one order, you will also be a loser in the long run. Similarly, if you do not have an effective trading strategy/method but merely placing an order like gambling or “hunch,” you will lose money.

You can never control the market, but you can control yourself. So what are the trading factors you can control to increase your likelihood of success? In today’s article, we will discuss this.

Always prepare a plan before every fight to increase the win rate in Forex

I have received a lot of emails from people. Someone said they didn’t know any method. They trade according to their “hunches.” They randomly enter/exit the market for vague reasons. If you combines many different strategies together, your trading is not much different from gambling. You should (must) focus on one and only one method that fits your personality. And remember (again) trading is completely personal. You fight alone and are responsible for everything.

Here’s what you should think about trading: The better you prepare before (live) trading, the more you have the opportunity to avoid being hurt seriously and to succeed in the future. Preparation is not that you trade on a demo account for too long. In my opinion, this is not good. The preparation here, in my opinion, is that you study very hard, read a lot of shares from the previous traders, etc., before starting to deposit money to trade.

Always prepare a plan before every fight to increase the win rate in Forex

Jumping into the battlefield without any psychological or physical preparation will get you killed very quickly. Or you HAVE HAD a plan but don’t follow it. All your preparation is wasted and stupid. When we make any plan in life, we MUST follow it. We have to stick with it long enough to know if it “works” or not. Give your plan (method) a chance.

Emotions are the enemy of every trader. So your main goal is to avoid making decisions based on emotions. If you are not really a savvy expert in your strategy or cannot explain it to a stranger who knows nothing about forex trading, you probably don’t have an optimal trading strategy yet.

Your strategy must be a “weapon” that keeps you away from your emotions. It helps improve the winning rate. And sometimes it also has to be a way to help you avoid stress affecting your life when trading forex. This is what helps you NOT to become a trader who is in constant losses or a gambler in the market.

Avoid the noise of low time frames

As I have shared in previous posts, the most suitable and effective method is that you trade with large time frames (such as H4, D1. H1 is ok but I do not recommend it. Stay away from candles below H1). They help you greatly increase the Forex win rate.

I will note down two main reasons why you should trade like that:

1. Large time frames give you a clear and panoramic view of the market. They have a great “reputation”.

2. A large time frame offers you a greater chance of winning if you are trading using candlesticks.

Focusing on large time frames is probably the fastest and most effective way to help you succeed in forex trading. Experience it for yourself.

Do not shoot yourself in the foot

You need to be very careful not to lose your discipline and patience when the market changes. This often happens. A trader is doing well in a market with a strong trend. But when the Forex market fluctuates without any clear trends, he/she loses all the hard-work results with a bad win rate.

A significant part of knowing whether to open an order is the ability to read price movements and interpret them. Many people ask me how to know if the market is trending or not, if the trend is over or not, or when the new trend appears, etc. Nothing is more accurate and effective for reading the market than understanding the candlesticks and price action.

Easily repaying the profit earned to the market is one of the most common and frustrating mistakes traders make. Common stories occur as follows: A trader has been trading very well for a while. He stayed disciplined in his strategy and earned big profits.

At that time, his risk perception decreases because the confidence is increasing. Gradually, he enters more trades and more often with orders of lower “quality”. Losing orders appear. And if this trader does not rectify and control himself soon, it is easy for him to get caught up in the market and frantically want to get back the lost coins. Dead accounts are obvious. It is just a matter of time.

Do not be more confident and cocky than what you have. You will not know when the market will pull you down.

Understand risk management and trade on a demo account first

I have received many emails asking about how much they should risk if their balance is $X. Obviously these are people who have not traded live yet.

If you are having the same questions but are trading with real money, stop it and go back to a demo account. If you have too many unknowns and questions about why you are risking your money, it is not different from gambling at all.

Do not feel impatient. You can trade forex till the end of your life. Just concentrate on truly learning the necessary knowledge.

To have a high win rate in Forex, avoid hasty trading

The popularity of smartphones and tablets today has led to many trading apps. A lot of traders have downloaded them and stuck to them wherever and whenever they have to leave the computer. I absolutely do not recommend you to OPEN ORDERS with these applications. Use them only for a quick overview of the market situation.

Using these apps can make you trade too much. Mobile trading makes people feel that they will not miss any opportunity. And they think that trading more corresponds to making more money. They easily get addicted or relapsed.

The truth is the best trading opportunities most likely appear on the H4 and D1 candlesticks. Mobile trading will keep you close to low time frames (because you observe the chart almost all day, anytime, and anywhere). It leads to low-quality opportunities and a high potential for losing money. In my opinion, you should avoid this.

To have a high win rate in Forex, don't trade on smartphones — To have a high win rate in Forex, don’t trade on smartphones

Simplicity significantly increases the probability of a successful trade

If you’ve read some of my articles before, you know that I value simplicity in trading. We should only focus on the most essential, most effective, and trying to eliminate the unnecessary.

We humans, whether people are involved in trading or those who have never traded, tend to complicate the trading things. I still remember the time when I started to learn about foreign exchange, one of my sisters said: “Oh my dear, don’t ‘play’ that, all my friends are losing money. You have to know a lot of stuff such as economics, the unemployment rate, and etc., that are very complicated.”. It is easy to get discouraged.

I used to trade with some other methods before I knew about the price action. And I recommend trading by this method. It is definitely the most simple method. Whether it works best or not depends on the individual (for me it is the most effective method). It fits almost perfectly with someone who lives and works in Vietnam like me. And I’m sure you and I have similar schedules.

Summary

Our most effective weapon when entering the market is preparation. Be as prepared as you can before you open an order on the market.

The market is an uncontrollable force. It does not distinguish who you are. It doesn’t matter how much money you have in your account. The better you prepare, the better you trade, regardless of the amount of capital in your account.

Trading is like a Three Kingdom battle among you, yourself, and the market. People often do too much when they HAVE PLACED an order, and too little when they HAVE NOT. That’s why many traders lose.

The post How To Increase Your Win Rate In Forex Trading appeared first on How To Trade Blog.

source https://howtotradeblog.com/how-to-increase-your-win-rate-in-forex-trading/

Sunday, May 9, 2021

These 6 “Beliefs” Will Burn Your Forex Account Quickly

Belief is what influences the way we feel and think about everything in life. And in forex trading, belief is definitely one of the biggest influences on success. When we believe in something, it will determine how we act and react.

For example, if you believe that flying is “dangerous” and “scary”, you will feel anxious every time you have to fly, though aviation is the safest form of transportation in the world. It is safer than driving and even walking.

In today’s article, I will list 6 of the most dangerous and most common “beliefs” of Forex traders. They affect the amount of your forex account a lot. Perhaps you may have one or even all of the beliefs below. And if you want to go further with Forex trading, try to limit and eliminate them as soon as possible. Please do, although I know it will be hard.

Foreign exchange trading is my last hope. I bet everything I have into it

If you are confident that “Trading is the only option for success and happiness in life,” you may not be able to earn real money from this risky market.

A person with the mindset of a “risk-taker” believes that trading is the last hope for him/her to achieve financial freedom and dream. He/she is the one who starts with a misleading view and perspective.

People say if you want to achieve something, really yearn for them and use all your resources on them. Yes, this view is true in many cases. But in my view, forex trading is not among this mass.

In fact, when trading, a person should feel completely comfortable and shouldn’t have any real pressure on HAVING TO make money (or even make money QUICKLY). In this way, he may be able to make a lot of money on the foreign exchange market. Do you feel “bitter”?

The most important thing you need to understand about this “belief” is that trading forex is not and will never be your last “hope”. And you should not and will never allow yourself to turn into a “risk-taker,” who can make a lot today but will lose everything in your forex account tomorrow.

With wrong beliefs, you can make a lot today but will lose everything in your forex account tomorrow

Spend time on your main job. Or if you are a freelancer, think of some other investment areas (such as real estate, restaurant – coffee business, etc.). Always ensure the minimum financial level you need. The less you feel NECESSARY for making money on the forex market, the easier it will be for you to earn.

Try to believe me and experience it for yourself.

I MUST win all Forex orders in my account

One of the most common beliefs is that they always feel that every order needs to be a winning one. They do not want to accept a losing order. They try to make every order important and unbeatable.

Their self-esteem doesn’t allow them to lose. And they forget, they do not know nor understand that we always have a random ratio of winning and losing for each order. Every trade has an equal chance of winning and losing.

(Oh, do not understand the words above that trading is no different from gambling. Please read this article.)

You don't have to win all orders to earn money in your forex account — You don’t have to win all orders to earn money in your forex account

Separate yourself from the urge to make money on the market. At that time, you will “unlock” and develop your potential and capabilities in forex trading. Many traders have a losing rate a bit higher than the winning rate. But they still make a lot of money because the AMOUNT of money they make on the winning orders is MUCH bigger than the AMOUNT they lose in losing orders.

They will not exit an order when the risk/reward ratio is not above 1:1. Even if it hits the stop-loss, they still accept it. Because it is an essential part of the “game”.

They understand that with only 1 or 2 standard winning orders, they will recover all their losses and even collect enough profits to offer them a comfortable life for a few months. Do not let emotions overwhelm your trading. 1 + 1 will be equal to 2. If it is A, then it will become B. It’s just that simple.

Trading will “solve” all my financial problems

Many traders rush into the market with a few debts on their shoulders. Or they currently have a tough career which they want to get out of. Or maybe they want to live their life freely, etc. They think that trading will solve all these problems. You need to get rid of all these thoughts in your head if you want to move on in the market.

You need to really have a solid financial background before sticking your toes into this “meat grinder” (that’s what it is). The solid financial background here does not mean that you must be a millionaire or must own houses and cars to be able to trade forex.

I mean if you still have a debt to pay (never let yourself owe others, especially money. Repay as soon as possible) or you have a family with bills to take care of, don’t participate in forex trading. Ignore the perspectives that they (who are usually brokers or instructors who want you to make money for them) say. The rate of people (actually) succeeding with forex is very, very low.

You need to have a solid financial background before joining the forex market

You can trade very well with the demo account but never put (almost) all your eggs in one Forex basket. Perhaps you are just having luck as people often say “gambling treats newbies” only. In forex trading (or stock, gambling), luck comes and goes very quickly. And to become a successful trader, you can’t rely on luck.

You should always feel comfortable (mentally, physically, financially, etc.) when trading forex. Absolutely do not borrow money to trade forex, stocks. Do not sink deeper into the mud.

I need to increase my Forex account balance quickly, as quickly as possible

No, you don’t need that. What you need is to trade properly and methodically. It may take about 5 years for your forex account balance to reach your desired number. But if you “dare” to try to accelerate the process, you only push yourself further and further away from the destination.

Most people come to forex trading because they want to make money fast. Therefore they trade a lot, open orders with a large volume (compared to their balance). And then what, they burn out their accounts very quickly, sometimes with just one order without a stop-loss.

It may take about 5 years for your forex account balance to reach your desired number

There is advice for you as follows: “Don’t increase the volume of your orders until you have doubled or even tripled your balance. Most people make the mistake of increasing the order volume too early when they get some positive initial results. It is the highway that takes you back to the old pig trough.”

I will trade with discipline and patience AFTER I increase the amount in my Forex account

I know a lot of new people and people who are “stuck” in making money in the market thinking that they will keep that hard part (discipline and patience) for later. That is after they earn a certain amount of money.

In fact, it is their greed and hope, the two most dangerous emotions in trading. This way of thinking leads to only one path that is losing and quickly losing money.

Usually, they will never trade with discipline and patience. Just like you say this week you’re going to eat healthily, stop smoking, and go to the gym every day.

Greed and hope will lead to only one path that is losing and quickly losing money

Do it RIGHT NOW if you know and understand that they are necessary and required. There is never a shortcut in trading or like most other things in life. The more proactively you start working on the most difficult parts, the faster you will solve the problem.

Get rid of the short-term “temptations” in trading. Focus on long-term stuff and be patient with it.

The more orders I open on the market, the more chances of making money I have

I, like so many others, had such belief in the early days of babbling in the forex market. Excessive trading is probably the most common mistake made by individual traders. They don’t even know it is a problem.

I always advise you to be patient and disciplined to wait for REALLY GOOD AND CLEAR opportunities. Thinking about the dealer in gambling, I know that most of them play and only play when they ensure the win in their hand (with tricks, cheats, tricking tools, etc.). Let’s “play” like the dealer. “I will only open orders with high certainty, or else I will just watch. Sometimes, I don’t place any orders for a whole month. Don’t ever think about taking my money away.”

The market always offers everyone equal opportunities. Your job is to look for REALLY worthwhile opportunities to risk your hard-earned money or to stay on the sidelines with unclear opportunities. You need to get rid of the idea that more opportunities mean more money.

You need to get rid of the idea that more opportunities mean more money

Conclusion

How many above “beliefs” do you have? Please share your trades. We are living on the internet. No one will know who you are.

So feel free to share together to improve. We always learn a lot from the mistakes and experiences of others.

Best regards.

The post These 6 “Beliefs” Will Burn Your Forex Account Quickly appeared first on How To Trade Blog.

source https://howtotradeblog.com/6-dangerous-beliefs-burn-forex-account/

Saturday, May 1, 2021

4 Key Factors To Success In Forex Trading

In my opinion, most people make trading more complicated than necessary. It is not easy to make money (in the long term) with forex trading. But it’s easier if we sit back and pick out the most important points to focus on. That’s what I call key factors to success in forex trading.

In this article, I will only list out 4 factors. And I want you to really focus on these ones. If you are spending time and energy focusing on other things in trading beyond these 4 factors, you are making your trading more complicated. You do not necessarily have to waste your time like that.

For those who are new to Forex or who are struggling and losing money in this market, this article will be of great help. This is what I always hope for.

The entry strategy factor in Forex

The first thing when talking about this is that you only need one strategy for yourself, the simpler the better.

Many traders do not know what their strategies are. They go around searching and trying one strategy after another. Or even worse, they also mix these strategies together, getting the wrong sow by the ear. This definitely makes you confused. And most likely it is the first reason you lose money in the forex market.

So, the first thing you need to focus on is having an appropriate trading strategy/tactic/method. I recommend pursuing price action. It’s simple and very effective. And no matter which strategy you use, master it. Be very aware of it, until you don’t need to ask questions when deciding whether to enter or exit a trade.

There is an old saying of the West: “Success comes when careful preparation meets opportunities.” If you do not have good tactical preparation, when good opportunities appear in the market, you will not be able to seize them.

The hard part here is that you only throw money into the market if and only if your system confirms it in the market. And we now move on to the next extremely important factor.

Manage your MONEY

This includes risk management, how much money you manage, and what to do with profit if any. The first step is to pre-set the risk amount for a trading order.

You need to be very comfortable with this risk amount. If losing it does not change your emotions much, it is a reasonable amount. You also need to ensure this risk amount is optimized enough for a few losing orders before your balance runs out. Because your strategy needs a series of orders to see if it works.

I have an example if you need advice, as follows: The risk amount for each order should be guaranteed so that your account balance can withstand at least 40 consecutive losing orders. If you have $3000 in your account, you can put a risk level for each order of $50. In case you lose consecutively 20 orders, you still have $2000 in your account.

In case if you lose (almost) 20 consecutive orders while still following the same method/strategy, then most likely it is not effective. Or maybe it’s because you’re not as disciplined as you think.

The important thing here is that you are not emotionally interrupted when setting a reasonable risk. You can completely turn off the computer, sleep a good night after placing an order. If you lose, it will only take a small reasonable amount compared to your balance.

The key to helping you manage risk to avoid the effect of emotions includes:

Don’t start with an amount that exceeds your comfortable tolerance if you lose. This amount will have to be at the level where you can comfortably do other things in the next 12-24 hours before you need to check your orders again. You need to be completely at ease when your order hits the stop-loss.

Don’t start with money you can’t afford to lose. If you don’t have much money or if you are still struggling to make a living, do not trade on a live (real) account. Please seriously practice with a demo account right down here.

Discipline factor

I often think of the metaphorical image of discipline as a glue that gathers the aspects of your method. You need to learn how to control the discipline to always stick to trading strategies, money (risk) management methods, exit strategies (closing orders), etc.

In trading, patience and discipline are almost identical things, or also can be seen as one. You need to be (extremely) patient to wait for the best opportunity to appear. And you need to be disciplined to stay patient. You cannot achieve patience without discipline. You need both, so focus on discipline.

Don’t make this complicated. You just need to really understand your trading method and have a good discipline to wait until the market offers you a good opportunity to practice your method. Do you understand what I mean here?

Discipline is also that you (minimize) do not interfere with opened orders in the market. Interfering with opened orders proves that you are negating your own strategy and method. You do not trust them.

The irony here is that it’s hard for most people to enter an order and then turn off computers to do other work. In contrast, people often sit back and nervously observe the fluctuations in their accounts. And most likely, they will stop loss or take profit much earlier than planned. And that is the way to lose money, even in the short or long term.

Maintaining discipline is difficult. We have no boss or foreman to whip our butts. There are only us who fight ourselves. Usually, it is too easy for us to pamper ourselves.

However, if you want to become a successful trader, who is among the meager percentage of making money from the forex market, you need to do things that most people can not do. Always remind and train yourself to keep discipline.

The exit strategy factor in Forex

At the beginning of the article, I told you that you need an entry strategy, and you also need an exit strategy. Often people have an entry strategy but no exit one or pay very little attention to this.

However, determining the exit point in advance may be more important than determining the entry point. Without determining a good exit point, traders often take profit too early and regret losing a big profit.

How well you determine your entry point depends on the state of the market you are in. For a trendy market, you should be brave to risk. Your risk/reward ratio should be 1:3 or 1:4 rather than 1:1 or 1:2. With the market struggling within a narrow range, you should be happy with the 1:1, 1:1.5, or 1:2 ratio.

What you need to note here is: always determine an exit point before you place an order (and of course, never start without a stop-loss).

The 04 bullets above are what I want you to really put your energy and time into.

Always practice and improve every day.

The path to becoming a trader is still very, very long ahead.

The post 4 Key Factors To Success In Forex Trading appeared first on How To Trade Blog.

source https://howtotradeblog.com/key-factors-to-success-in-forex-trading/