In this article, we will look at some simple tips which can increase your profit potential and reduce risk instantly. These tips are simple to apply to any strategy instantly and will help you maximize your FX trading strategy in terms of profit potential, while at the same time, keeping your risk at manageable levels.

Patience

Most traders are so keen to make money, they try and force profits from the market and want to trade all the time. They are in the market everyday and work on the logic that if there in the market, they will have a chance to catch the best moves but the reverse is true – they end up taking low odds trades and losing.

Most traders can increase their risk to reward by, simply cutting the number of trading signals they transact. If you want to win art Forex trading you need to learn patience and only trade the best trends which leads me on to the next point.

The Best Trade is no Trade

Having no trade in the market, should be seen as a trade and its the safest trade you can make. You can't lose anything when you are not in the market and if you view having no trade as a money management technique, you will be doing what around 90% of traders don't.

Trading frequency and your ratio of winners to losers doesn't matter its the size of your profits over your losses which will either, see your trading strategy lose or make profits. So wait and only trade the best opportunities and the rest of the time keep your money safe and secure and you will soon see your profits increase.

Trade Moving Markets

Most traders want to trade at market turning points and pick market highs and lows and for experienced contrary traders this can offer some great risk reward trades, if you are a new trader though learn to trade moving markets first. The reason why is simple – at market turning points a high or low can be made but the market, my enter a consolidation pattern for weeks or months on ends which ties your capital up.

If you trade strongly trending markets your money works harder for you. So start with trading trends first and as you become experienced, you can try contrary trading strategies.

Be Flexible and Change Your Opinion

Most traders tend to enter the market with a set opinion and it remains the same, as when they entered it but this is a huge mistake. If you thought the trade was good today and then the market picture changes the next day - change your view!

The idea that you enter a trade and set a set target and stop loss and wait for either to be hit is bad money management. If the market changes be flexible and change your view and you will probably save yourself from a loss.

If in Doubt Get Out

If for example, you enter a trade with your FX trading system looking for a big move quickly and it doesn't come, get out. The words “if in doubt get out” are sound advice for any Forex trader.

How many times have you held a trade, thinking that your not going to make money but have been of the opinion – I am in it so will hold it? I know I have done it and most traders have so be flexible and just get out if you have any reservations about your trading signal.

Widen Your Stop and Reduce Your Leverage

Most traders put there stops as a crowd and keep in mind the crowd losses money so put your stop where other traders don't. This means risking more on your stop but you cannot trade with close stops in currency markets, because they will be picked off.

Put your stop back behind where the bulk of traders have theirs! Sure, your risk is a little bit more but your chances of success are much better. Traders who use 5 – 10 pip stops, think their trading in a low risk way but their trading is very high risk, because the odds of a close stop getting hit are high.

I work on the general rule that I will risk 50 – 100 pips a trade and I am looking to make, several hundred in profit and my leverage is always below 10:1. Most traders use close stops and high leverage and this leads to disaster, so be cautious with leverage and sensible with where you place your stop, it should be behind the crowd but close enough to give you protection.

Final Words

If you want to make bigger gains in FX trading the above money management tips are easy to understand and apply. You will trade less signals and you will make more money, as you will be trading with better odds of success and trading the odds correctly, leads to bigger FX profits while at the same time reducing your risk Apply the simple FX trading tips above and your trading will become lower risk, more profitable.