At The5ers, we get to speak to many of our traders about their strategies, systems, and emotions through our Portfolio Analyst Resource.
We hear about the traders’ challenges and successes!
From these talks, we get to learn a lot of important insights regarding trading performance that might be helpful for all of you!
Here are some key insights from last month:
“I usually trade consolidation breakouts, but I struggle letting my trade run in my favor; I find myself closing for small profits as market retraces”
Insight: After breakouts, It is very normal for the market to retrace back to the breaking level before continuing in the previous direction. These are called Swap zones, where resistance becomes support or supply becomes a demand. Be conscious of that pullback being normal market behavior, expect it so you don’t close your trades early when it happens.
“I do great on my demo accounts, but I can’t perform the same on real accounts”.
Insight: I hear you. I know this from a lot of traders, myself included years ago. Once real money is on the line we start trading differently. It is a normal and natural process we all need to go through. Expect to lose money at first, but make sure you learn from those losses. Think of that first lost money as learning fees, the same money you would commit to learning any other skill. Once trading real, start with very small positions, get used to them, and slowly increase your position size.
“I started trading supply and demand areas, but I am getting a lot of losses.”
Insight: SnD is only a way of reading and understanding the market, it isn’t a strategy itself. You need to build your own strategy around SnD concepts using parameters that suit your lifestyle and trading style. Let’s start adding some filters and better definitions of how you define tradeable areas.
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“I recognize that I start revenge trading and over trading when increasing lot sizes”
Insight: First, it is impressive you recognize the fact that increasing lot size is actually the cause for bad performance such as over-trading. Now you are aware of that, let’s approach it.
Risk tolerance is like a muscle we need to build and make stronger. We can’t jump from a micro-lot on a small account to managing 10 lot positions from one day to another. Even if you are trading a larger account, keep your lot size small and increase it slowly over time. You will soon get used to the big numbers and positions and will be able to trade larger positions.
“Sometimes I face a contradiction between my strategy giving me a signal and my intuition ”
Insight: Tough one, but you need to go with your strategy. Otherwise, you will never know its real stats and performance since you manually interfere in it. If you are getting a lot of these dilemmas, you might be doubting your strategy which is not good. We need to add to your trading plan how to handle these situations, maybe with special trade management for these specific trades.
I found your advice to be very helpful which I plan to implement in my trading immediately.
Thanks again
Insights for forex traders final words
Some trading challenges are very common across many traders. Some of them are more sophisticated but some have a relatively simple solution.
We are happy to see the improvement in the equity curve of the traders who have attended a Portfolio Analyst meeting.
If you are a 5ers trader, you can also schedule an appointment with one of our portfolio analysts to share your challenges and get some feedback. Just go to your dashboard and save your spot.
If you want to receive an invitation to our live webinars, trading ideas, trading strategy, and high-quality forex articles, signup for ourNewsletter.
Before diving into the world of forex trading, invest time in education. Learn about the forex market, how it operates, the various trading strategies, and technical and fundamental analysis. Continuous learning will help you make informed decisions and develop effective trading strategies.
The 5-3-1 strategy is especially helpful for new traders who may be overwhelmed by the dozens of currency pairs available and the 24-7 nature of the market. The numbers five, three, and one stand for: Five currency pairs to learn and trade. Three strategies to become an expert on and use with your trades.
Like many high-performance endeavors, success in forex trading takes time, patience, and a lot of practice. Many beginners don't last very long in the forex market – not necessarily because they deduce losses that are impossible to recover from, but because they make a few losses in the beginning and give up.
“Profit Parabolic” trading strategy based on a Moving Average. The strategy is referred to as a universal one, and it is often recommended as the best Forex strategy for consistent profits. It employs the standard MT4 indicators, EMAs (exponential moving averages), and Parabolic SAR that serves as a confirmation tool.
The 90 rule in Forex is a commonly cited statistic that states that 90% of Forex traders lose 90% of their money in the first 90 days. This is a sobering statistic, but it is important to understand why it is true and how to avoid falling into the same trap.
Let profits run and cut losses short Stop losses should never be moved away from the market. Be disciplined with yourself, when your stop loss level is touched, get out. If a trade is proving profitable, don't be afraid to track the market.
Trading forex is risky and complicated, and no strategy can guarantee consistent profits. Successful forex traders are those who tend to have a good understanding of the market, good risk management skills, and the ability to adapt to changing market conditions.
The 1% risk rule means not risking more than 1% of account capital on a single trade. It doesn't mean only putting 1% of your capital into a trade. Put as much capital as you wish, but if the trade is losing more than 1% of your total capital, close the position.
What is the 3 5 7 rule in trading? A risk management principle known as the “3-5-7” rule in trading advises diversifying one's financial holdings to reduce risk. The 3% rule states that you should never risk more than 3% of your whole trading capital on a single deal.
The middle of the week typically shows the most movement, as the pip range widens for most of the major currency pairs. Saturdays and Sundays tend to be the least favourable days for trading forex. Most traders tend to avoid trading forex during holidays and around major news events.
To implement the 50 pips a day strategy, traders usually set a profit target of 50 pips and a stop loss to limit potential losses. They carefully monitor the market and open positions when they believe there is a high probability of achieving the target profit.
The Head and Shoulders pattern is widely used among traders and is considered one of the most reliable reversal patterns. The timeframe of these patterns includes a few weeks to many months.
The most profitable trading strategy is personalized, adaptable, and continuously refined based on experience and market conditions, with consideration for your personality, discipline, capital, and risk tolerance.
1. Let the money flow. Trading Forex with flowing profits requires informed decisions based on objective indicators rather than gut feelings. So, the first rule of trading stocks or other instruments is to close deals strategically while mitigating risks.
You need a trading plan because it can assist you with making coherent trading decisions and define the boundaries of your optimal trade. A decent trading plan will assist you with avoiding making passionate decisions without giving it much thought.
A trading plan is a set of rules that specifies a trader's entry, exit, and money management criteria for every purchase. With today's technology, test a trading idea before risking real money.
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