here are some forex tips that will help you to generate constant returns in the market -
#1. Choose a Consistent Trading Strategy
The first step is to choose a trading style in the forex market. There are several options but most of them fall into the following categories -
i) Scalping
ii) Day Trading
iii) Swing Trading
iv) Long Term Trading
#2. Set Risk/Reward Ratio to 1:2 or Higher:
Traders have no guarantee that they will achieve more than 50% of winning trades. However, one way to address this concern is to set the risk/reward ratio to 1:2 or higher. Take a situation where you are planning to gain 100 pips from a given position. In this case, you can consider setting a stop-loss order below 50 pips of the current market price.
#3. Setting Realistic Profit Targets
Setting risk/reward ratio is important but it might not be enough for forming consistent profits. Another important aspect to earn returns is to set realistic profit targets. This can be done depending on the average daily volatility of currency pairs. For example, EUR/CHF is a pair that can move by 50 to 55 pips. In this situation setting a profit target of 100 pips will be unrealistic.
#3. Setting Realistic Profit Targets
Setting risk/reward ratio is important but it might not be enough for forming consistent profits. Another important aspect to earn returns is to set realistic profit targets. This can be done depending on the average daily volatility of currency pairs. For example, EUR/CHF is a pair that can move by 50 to 55 pips. In this situation setting a profit target of 100 pips will be unrealistic.
#4. Avoiding High Leverage
Leverage is a double edged sword. Overleveraged trading can easily lead to several losses that can be difficult to recover. For example, in the case of 400:1 leverage, if the market goes against the opened position by 0.25%, it might be enough to wipe out the entire trade, so a trader will lose his or her entire investment.
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