This simple exercise will increase Forex profits 100% and works for 99% of all short-term FX traders - stop trading so much - widen out your stops - widen out your profit targets - and only trade in the direction of the trend indicated by 4 hour chart.
1) Stop trading so much
Sure there are no commissions but the spreads are HUGE and believe it or not (well you'll believe it after you do the simple exercise below) the spreads are reducing your profits 100%!
2) Widen out your stops
Initial stop loss should be a minimum of 23 points; I use between 23 and 35 point stop losses for short-term trading.
3) Widen out your profit targets
Unless you think a trade can make you 100 points or more don't do it.
4) Only trade in the direction of the 4 hour chart
The real money is made in the direction of the trend
Simple exercise
1) Download all your trades for the year into an excel spreadsheet (if you don't know how to do this ask your broker for help).
2) Determine the dollar value of the spread for each trade.
3) Sum up the total dollar value of all spreads for all trades and add this number it to your current account balance; this is your spread adjusted account balance.
4) Take your spread adjusted current account balance and divide it by your opening balance at beginning of year; the result will be a percentage change.
5) Take your actual current account balance and divide it by your opening balance at beginning of year; the result will be a percentage change.
6) Subtract your spread adjusted year to date percentage change from your actual year to date percentage change.
7) That number should be 100% or more
8) Take the necessary steps as outlined above (1 to 4) and improve your results 100%
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by Jimmy Young
- EURUSDTrader
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