hr: Currency

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More often than not, the main reason new forex traders lose money is that they simply do not have a specific goal. Strange as it may seem, a lot of new traders don’t know what they want to accomplish.

Of course you might say that everyone wants to make big bucks, however, a trader must be realistic as he tries to achieve his goal. Forex trading is just like flipping a coin. If you get paid $1 for each time the coin you flipped landed on tails and you lose $1 if the coin landed on heads, you could spend the rest of the day and break even at every hundred coin flips.

So where does this analogy take you? You should think of forex trading as simply breaking even, but with a slight twist. Instead of winning a dollar or losing a dollar with each flip, think of losing a dollar when you lose and gaining a couple of dollars every time you win.

Remember that in order for this principle to work is if you go with the trend and if the setup you took is solid. This is what is called a 1:2 risk:reward ratio. If for example you risk 50 pips on the trade, you should look for profit that is double that amount, which is of course 100 pips.

Now, following that principle, regardless if you lose a series flips in the end you will still come out the winner at say the hundredth flip. A forex trading demo can also help here.

TradingSolutions:
Financial analysis and investment software that combines technical analysis with neural network and genetic algorithms.

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