6 Ways to Increase Profit Without Increasing the Risk of Loss
6 Ways to Increase Profit Without Increasing Risk
Which traders do not want to increase profit in forex trading? The answer is almost certain: no. Every trader would at least aspire to be able to increase profits in trading. But you also need to be aware that in trading the profit opportunity must be directly proportional to the level of risk. Thus, when you intend to enlarge your profits, never forget that behind it there is a risk of loss that is not less magnitude.
Then how to increase profits without fear of risk?
This paper is not intended to negate the possibility of loss in trading. No. This paper is intended to share knowledge and experience in order to still be able to enjoy trading even though always go hand in hand with risk loss ready to "nudge" us at any time.
The real solution lies in your expertise in managing your capital. There has been much writing about money management, risk management, trading plan and trading psychology. All of that writing departs from the "soul" of trading, which is 3M: Mind, Method, Money.
Here are some tips that you can try, based on our experience during the struggle with the world of trading for at least the last ten years.
1. Map of Capital Strength
See how much your capital strength is, then map out by preparing a trading plan. Profit targets should be realistic. For example, the average trader typically earns 10-20% profit per month from start-up capital. We're talking average traders, not super traders like Ed Seykota. In the world of forex trading is possible to earn profits up to 100% of capital per month (I even ever up to 80%), but such incidents can be said to be rare or inconsistent. Perhaps there are those who can consistently make profit hundreds of percent per month and lasts for years. But even if there is, obviously he is not the most traders.
Let's talk about the reality that we often meet alone, where even to be able to just consistent profit anybody still struggling. Here's what we want to try to help. Well, if you want to get - for example - $ 1,000 or $ 2,000 per month, then it's fair to prepare a capital of about $ 10,000. Somewhat unrealistic if you target $ 1,000 - $ 2,000 per month if your capital is only $ 500.
lease understand, I am not underestimating traders with little capital. The point is: target profits according to your capital strength. Based on experience, with a capital of $ 500 (for example), it's realistic if you're targeting to earn $ 50 to $ 100 per month.
2. Expand the View
Most traders are only fixated on one trading instrument only. If he is trading forex, usually only fixated on one currency pair only. If he is a stock index trader, maybe just look at the Nikkei only. Or there is also just gold trading. It's not wrong if you do something like that, but it also means you will simply ignore opportunities in other currencies, or other stock indexes. In fact, there are so many trade subjects that you can transaksikan. 17 (seventeen) currency pairs, 3 (three) commodities, 8 (eight) stock indices and 183 (one hundred and eighty three) preferred shares that can be transacted on a CFD basis. It does not have to monitor all the products mentioned above, but at least try to expand your view because opportunities can appear in other products. (Also read: Many "Doors" in Forex Trading, Tap All!)
3. Set Risks
As has been said, the risk is directly proportional to the odds. That's why you need to set how tolerant you are to the risks that may occur. The risk in forex trading is loss. If you do not limit the risk tolerance, it's the same to let all your capital (possibly) be consumed by the market. These risk limits are also set in the trading plan. One technique is position sizing. With position sizing you can transact comfortably without worrying about loss too big.
At the same time, you can also maximize the profit opportunities that exist. You should not be afraid to open a position of two, three, or even ten lots at a time as the risk calculation is still below your tolerance limit. More complete about position sizing, you can read here.
4. Immediately Draw Profits Gained
Most traders do not realize that profits should not be mixed with capital. If for example you start trading with a capital of $ 5,000 and you have managed to collect profits of $ 1,000, then immediately pull the benefits. Let your account balance back to $ 5,000.
Why is that?
This is so you do not "terlena" by assuming your capital is still "safe" despite the middle of a loss. Like the example above, you have managed to reap a profit of $ 1,000 so that your balance to $ 6,000. In the next transaction you are experiencing a loss (floating loss) to reach $ 1,000. In a situation like this often a trader thinks, "Ah, my equity is still $ 5,000 ... the 'lost' is just the profit yesterday."
This feeling of calm washed away. Often traders who are in such conditions actually actually expect the price will bounce back, so he can benefit. Often it is precisely when he really loses, regret arises because he thinks his hard work of collecting previous profits becomes futile. In fact quite often also traders who mental drop at the time and wondered, "Is this forex trading is suitable for me?"
Another case if you do intend to enlarge capital. If for example from $ 5,000 your capital expands to $ 6,000, then immediately adjust your trading plan with nominal of existing capital. If for example the risk tolerance per transaction is $ 500 per trade (10 percent of capital), then it can be increased to $ 600 per trade.
5. Know Time Out
The "exit" strategy is also important. The simplest is to close the position after the target profit is reached, or stop-loss taxable. Can also close positions immediately after your trading system requires that. Less commonly realized is to immediately close the position after the loss reaches a certain percentage of the profits that have been obtained previously.
A concrete example like this: before you have managed to collect a profit of $ 1,000. You should then specify that if subsequent transactions cause the profit to decrease by 50%, then you will close the position. Thus, your mental and capital will stay awake. Of course this does not need to be applied by letter lijk. Apply the rule to a specified multiple, for example every multiples of $ 1,000, depending on the amount of capital and profits you earn.
6. Move On
This last point is closely related to the psychology of trading.
We are equally aware that there can be no trading system that can be 100% accurate. There are times when you incur losses because the market is not moving according to your estimates. At such times, all you have to do is do an evaluation, and move on immediately. There is no point regretting the lost money in the merciless market movement. If you really have a good trading plan and manage risk tolerance, there's nothing you need to worry about. Show must go on. Those are some points that can help you maximize trading without the need to become paranoid haunted by fear of loss. Hopefully useful.
