One of the most humbling statistics surrounding the foreign exchange industry would be how around 78% of retail forex traders lose money.
With statistics as staggering as this, it just goes to show that every pip does count and that the demand for a versatile and technically-sound trading plan is essential.
It’s like the saying by Mike Tyson, “everyone has a plan until they get punched in the mouth,” except for in this case the other heavyweight in the foreign exchange markets – and make no mistake, the FX markets ARE are the real heavyweight.
Generating a daily turnover of over $5.1 trillion (over 20x the volume of the US stock market), the foreign exchange market is an absolute beast and the truth of the matter is that we are all but small fish in a mighty ocean of forex tycoons that embody the form of bulls and bears.
I tell you these truths not to deter you from investing in forex trading but rather to arm you with the critical need-to-know insight that way you not only better understand the risks involved but more importantly come into forex trading with a more realistic mindset and projection of what’s to follow.
In an industry where every pip counts let’s discuss a simple 5 step path that you can employ to start conquering pips and generate longstanding trade success.
Many novice investors get so caught up in trying to find the best forex trading strategies that they forget to employ the vital fundamentals of risk reduction.
For this reason, money management is divided into a three-step application planned path that can not only be used to mitigate your losses but allow you to amass more pips over time.
The more pips you can conquer overtime the more money you may generate in return.
Therefore, do not underestimate the power, and dare I say the habit of sensical money management techniques along with setting up stop-loss and take profit for every single forex trade executed.
Money management is a widely neglected topic in forex trading and it partially stems down to not only a trader’s inexperience but also how traders don’t oftentimes want to be “told” how to invest their hard-earned money.
Regardless, proper money management can either break or make your career as a trader, we just hope its the latter of the two.
Vladimir Ribakov recently composed a thorough Forex Money Management Guide for traders although a common rule of thumb to exercise is no more than 3% to 5% of your account balance per trade.
If you plan to be a trader who doesn’t want to sit around with their eyes glued to the computer all day then it is imperative that you always incorporate stop-loss and take profit levels with your forex trading.
For those of you executing buy trades you can get away with squeezing in between 2 to 3 pips below the previous swing high but remember, stop-losses are called stop-losses for a reason and trying to prop up trades to obtain a few extra pips can pay off generously long-term but can also chip away at your pip gain too, so be careful how you employ your stop-losses and try to mitigate its double-sword effect.
Now onto adjusting take profit target levels.
One of the greatest moments for forex traders would be when their investments hit take profit levels, not only are you flooded with elation from your accurate prediction but it feels amazing having your money work hard for you instead of the other way around.
If you’re an analytical forex trader who tends to work with the same trading strategies or no more than a few at a time then you may be able to analyze your performance and see missed opportunities where you could have acquired more pips.
If you notice a familiar trend where you are consistently leaving pips on the table and you don’t foresee a variation in your strategy or a significant shift in market conditions then you could consider boosting your take profit levels up a couple of notches unless they interfere with predetermined market variables (such as resistance levels) that you already have set-in-stone.
Regardless, simple adjustments to both stop-loss and take profit levels when combined with appropriate money management techniques can result in traders of all skill levels generating more pips.
Employing breakout confirmations into your trend trading strategies are a powerful precautionary measure that can save you hundreds to thousands of pips over time.
Generally, breakout confirmations are more common amongst traders who use more long-term time frames and are employed after a trading signal has been generated where the following one or two candles are used as a confirmation to “confirm” that price moves in accordance to their strategy.
Incorporating automated trading systems into your day trading routine is one of the most effective ways to conquer pips as a forex trader.
The vast majority of forex trading systems in 2020 function autonomously while many system’s trade mechanisms are semi-automated which only leaves traders to execute the signaled investment.
Semi-automated trading systems are one of the best routes to choose because traders are able to maintain control over their funds (not some AI program) while traders don’t have to stick around the computer all day or conduct copious sums of analysis just to develop a few concrete trading opportunities.
Among the best forex trading systems of 2020 can be found on our Forex Trading Products Performance Page.
Proper money management, stop-losses, appropriate take profit levels, using breakout confirmations, and employing trading systems are 5 easy applicable steps that any forex trader can utilize on their path to conquering pips.
Bear in mind that your forex trading journey doesn’t have to be plagued with complexities and that oftentimes keeping a simplistic trading approach not only results in more pips being amassed on your end but also a greater peace-of-mind.
Should you have any questions on where to begin your forex trading journey, how to get started, why regulated forex brokers are best, or anything related to forex trading we invite you to connect with us at support@vladimirribakov.com or drop us a comment below!
As always thank you for your time and I sincerely hope you found some of the information shared in my publication of value.
Tim Lanoue
Guest Author
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