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Anyone who trades on the Forex market wants to be profitable with that undertaking. Moreover, Forex traders who are committed to the game also want to improve their profitability as much as possible.
Does this describe you?
To take your profitability in the Forex market to the next level, what can you do? While you cannot expect to make a certain amount of money every day, you can aim to make a little more each day.
Some Forex traders claim they don’t know of strategies to increase their profitability. However, Forex Academy, the leading news and research website for the Forex industry, is here to change all that. They believe there are three basic reasons why Forex traders aren’t profitable. Want to find out more? Let’s take a look.
1) Improper Position Sizing Will Limit Your Profitability
Risk management is a crucial part of Forex trading. Additionally, position sizing is an innate part of risk management. In fact, seasoned traders can spot the difference between a profitable trade and a super-profitable trade by taking a look at its position size. It’s pretty complicated, but you can learn when to place a larger trade to minimize your trade’s risk exposure.
For example, if you see that the market is working in your direction, don’t waste time wondering whether you should increase your risk or not. Just do it. Go with the flow when the market is on your side. This will give you a better chance to increase your profitability.
However, if your instincts are that the market is volatile, it can be better not to increase your risk. Let the turmoil pass before you make a larger trade again. Until then, play smaller hands until you better understand the market’s ongoing condition.
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2) Failure to Adapt to Market Conditions Will Keep Your Profits Low
Every website on Forex trading will tell you one thing: The market is volatile, and you should always adapt to changing conditions. Forex Academy also supports this strategy.
If you don’t adapt to changing market conditions, your strategies won’t always work. For example, you cannot expect to win big when the volatility is low. Of course, the risks are also lower at those times, but then, so is the profitability.
That is why the experts from Forex Academy advise new traders to assess the market before confirming their trade order. Try to plan your trades ahead of time by first predicting the market’s condition.
Also, be reasonable with your expectations. Don’t expect to make millions with every trade. It’s not a lottery where you will either win the jackpot or nothing at all. Small gains count for something, too.
3) Fear of Failure Keeps You Playing Small
Fear of failure will cripple your confidence and limit your profitability. That’s not the way forward.
Of course, when you are trading in the Forex market, you should be prepared to lose at least some of the time. However, think of it in terms of a learning curve.
As an example, some traders short their trades when the pair falls, or they go long when they see a rise. While this strategy can be profitable sometimes, it has its limitations.
For one thing, it won’t get you a good price all the time. You could also miss out on some pips that could improve your reward/risk ratio. Moreover, this strategy can cause you to enter levels that don’t allow you to pull back.
Your Profitability in the Forex Market Largely Depends on You
These three factors can combine to form a massive obstacle in a trader’s mind. So if you notice one of these obstacles is blocking your profitability, crash through it as soon as possible. Then your Forex trading can be more profitable than ever before.