SIMPLE KEYS TO MAKING PROFIT in FOREX

The ways to generate profit is definitely to trade correctly & profitably all the time. Easier said than done, the thing is like in any sports or games, it is impossible to win all the time, every time.

In tennis, look at Roger Federer for example. He doesn’t need to ace every serve in order to have a career gain of over USD44 million. It’s all about playing it smart and winning the whole battle at the end of the day that matters.

Same applied to us as traders, the KEYs to winning trades consistently is to apply the right principles, techniques and indicators in justifying our decision to enter a trade. Since we could not make it 100% correct all the time, this is where good money management plays its role in protecting our equity in case we're wrong.

So, Rule #1; TIMING is the key. You have to look at the time for entry especially the Daily bias, 4H, 1H, 15M and even 5M for a perfect entry setup decision. Always stick to the maintrend though there are a few exceptions that I shall discuss later.

Prior to entry, you must always question whether it is a good setup or otherwise. What do the charts pattern and price actions trying to tell you? Is the market moving sideways, channelling or trending? Read the reports from various sources to confirm your understanding. Is there any major NEWS coming out soon?

Either way trading is a game of probability. You take your bet base on what the market will likely be doing since going against them is definitely unwise. It is not an exact science where A plus B will always equal to C. It is an art, just like a lady that you should carefully learn, appreciate and comprehend. It takes time for sure. But with proper skills, techniques and respect, you shall succeed.

Other than timing, the next key is Rule#2 : RISK MANAGEMENT, or so called money management. The only questions thate relate to this will always be:

1. How much to risk for this single trade? (ie 5%, 3% or 1% of my equity, than translate them into pips SL)
2. What is the best position size to take for this trade? (ie 10 std lots, 5 std lots, 1 std lots or 1 mini lot)
3. What is my profit target? (ie 200 pips)

Some people put this thing first on top of timing but the way I see it, there is no point talking about accepting minimum losses when you keep on losing. My argument is, though you may manage your risk pretty well by putting only a tiny amount of capital in any trade, you still loose substantially if you keep on losing.

Hence, you need both or you will just end up as bad as those gamblers who put everything at stakes.

In summary, the fundamental keys to generate profit in forex trading is:

TIMING (SETUP : ENTRY : EXIT) + GOOD RISK MANAGEMENT = CONSISTENT PROFITS

copyright Ó 2009 by shahrul nizam hussin