4 Proven Ways To Conquer The Forex Market And Grow $1,000 To $10,000 In 12 Months

 

Sure, you can convert that $1,000 to $10,000 in just 12 months. It may be challenging but very possible. You do not have to lose fortunes in forex trading before you learn to do it right. It is true though that experience comes from making mistakes. But I also believe it can be a good idea if we learn and gain our experiences as well from the mistakes and experiences of others. Today, I want us to examine 4 proven ways for you to protect your capital from unnecessary and unending losses so you can grow your trading account with good and lasting profits. It is not important what kind of trader you are or your level of experience. But please, do me a favour by implementing the lessons you will learn today. I have itemized the points for clarity. As you practice what you will learn here you will be amazed how that little $1,000 of yours will soon become $10,000.

 

Before implementing the following points it will be very necessary you identify and follow the trend in a very timely manner.

  1. Lot size/volume: Many traders do not know how to choose a suitable volume or contract size to trade. Following the first rule which says you should never expose more than 50% of your account’s equity in trade, we will work it out thus: You should never enter a trade or take trades with more than 0.50 volume. If it is only one trade you want to take (which is highly recommended) you either choose between 0.01 to 0.09 or 0.10 to 0.50. I assume here that you already know you should not use more than 100:1 leverage. Therefore, with 100:1 leverage, 0.10 lot/volume will mean that your used margin or margin in trade is $100 making your free margin to remain $900, which also translates to 10% of your equity in the trade. However, if you decide to trade with 0.50 it will simply mean you have $100 * 5 = $500 in the trade resulting into 50% of your accounts equity in the trade. Remember that your first duty as a trader is to protect your capital before chasing profits. Make this your first rule and you will not only survive the forex market but truly conquer it. And as your account grows, you reduce how much you expose to the market. Set a target to expose like only 10% to 20 % say in 6 months. What this means is that you would have grown your account to a certain level where even trading on a standard account to a certain level where even trading on a standard account you can  comfortably expose about 20% with confidence. My recommendation here is for you to expose 20-30% of your account. That is, trading with 0.2-0.3 lots if you have $1000 account balance.
  2. Stop Loss Order: Here we consider the second rule which says we should not risk more than 3% to 5% of our core equity in any single trade. Remember core equity = Equity/ capital minus used margin or margin in trade. Core equity is the same as free margin. Now let’s go back to our $1000 which is $50. the next question to ask you is how many pips will give me $50 on 0.50 lot size will give $5. Hence, we divide $50 by $5 = 10 pips. What this now means is that your stop loss order should not exceed 10 pips. So, if you spot a good trade set up that does not allow you a risk for a stop loss of 10 pips you will need to do anyone of the following; reduce your lot size, or skip the trade. But you really need to develop a good training strategy that will allow you manage risk well. Although I recommend risking less; for example risking no more than 3% in a mini account and not more than 2% in a standard lot. And as your account grows you continue to reduce your risk because more risk means more money. As an example I have a trading strategy which allows me risk between 5 and 10 pips. Most of the time I only use a stop loss order of 5 or 6 pips. I’ll recommend this trading materials for you from one of the best internet gurus in the industry http://tinyurl.com/65njow

 

  1. Risk-Reward Ratio: This simply allows you calculate how much you intend to give away if the odds are against you compared to how much you intend to earn if they work in your favor. An example is a situation where you set a stop loss of 10 pips and a take profit of 20 pips, giving you a risk to reward ratio of 1:2. I have had the privilege of doing diagnosis on some traders’ accounts to find out what the problem could be with his accounts. One I have always noticed is trader always short changing himself because of fear. He places an order with a stop loss of 50 pips and a take profit of 5 or 10 pips. The reason some have given behind this kind of trading decision has been that it will be easier for price to reach the Take profit than the stop loss. But truth is that it has not always been the case for them in most instances. Instead of short changing yourself this way you need to own a trading strategy or system that is good with defining market/price trends for you. If you are trading along with the trend, you stand a better chance of having a good risk-reward ratio of 1:5. this system is for news trading. If you are not a news trader, I will suggest you work out something that can give you at least 1: 1.5 or 1:2 risk reward ratios. 1:3 may be way too much for a technical trading system. With a good risk to reward ratio, you can make up for any lapses your trading system may have. For example, if you spot 10 trading opportunities in a week trading only news events, and happen to lose 5 and win 5, which is 50:50. with a risk –reward of 1:5 one of the systems I use offers (assuming you risk 6 pips on a trade) 5 losses will equal 6*5 = 30 pips. And with a Take Profit of 30 pips on the other 5 trades, you will have  30 *  5 = 150pips. Net profit = 150- 30 giving you 120 pips. Find out what works for you and protect your account.

 

  1. Trailing Stop: This is not the least of all. In fact, this tool is so powerful it can turn around your trading career. You use this tool to protect your profits. How this works is that after you must have entered your profits you have made. This can be used for both long term and short term trends. With this tool, sometimes your stop loss could be triggered on profits or break – even. Trailing Stop moves in the direction of the trend. Understand and master the use of these tools  and you will not only protect your capital but you will watch your trading account grow beyond your imaginations. Don’t give up, be patient, its will always be in your best interest to stop chasing profits and first protect your trading capital.

 

To your online wealth success, if you enjoyed this article why not share it with your friends, digg it, stumple upon

 

I’ll highly recommend one or two materials for you to succeed online, in the forex business, they have helped and I believe you too can succeed with it

 

Visit http://tinyurl.com/65njow   and get wealthy on the forex market Happy trading  

 

P.s ( your comments would be appreciated)

 

Uzoma Eze is an online investment analyst and has to his credit several websites including a forum www.egusiland.com      

Comments

  1. Not the best idea in the world, but it may work!

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