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.
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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.
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.
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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.
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.
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