How to get Forex trading edge? Many traders wonder if there is some special formula for success. However, there is no magic, just two key techniques.
AtoZForex – Every Forex trader has wondered at one point of time if there is some recipe for a perfect Forex trading tactics. However, I firmly believe that there is no special formula for success and it takes a lot of effort to become a professional trader. Moreover, in my view, we can’t talk about successful Forex trading, but only about a professional approach.
What is an edge at Forex?
In order to master your skills, you need to practice a lot. Additionally, it is vital to actually concentrate on one trading Forex strategy in order to achieve real results. One of the ways to do so is to focus your mind on one particular topic at once and master it. It is impossible to learn everything at once!
Thus, today, we will explore what is an Edge at Forex trading and how to use it. Having an edge in trading means having a way to make more money that you lose over a particular number of trades.
However, does this guarantee that you will make money on the next trade?
We can’t predict this. What is known is that having an edge will almost assure the gain over a particular number of trades. There are some points that you will need to pay attention to. These include:
• Having an edge does not imply you have prevailing winning trades
• Having an edge does not guarantee your winning trades are significantly bigger than you losing trades.
Speaking simply, the edge you are having in your strategy is what will provide you with an advantage over all the other traders in the market.
How to get Forex trading edge?
There are two key ways to get and edge at Forex trading. First, you can win more often that you lose, while your losses are maintained. The second option is that you win in bigger proportion in comparison to you average loss in trading.
1. How to actually win more often than you lose?
In order to win more often than you lose, you should have a trading setup that will guarantee higher odds of bringing a gain than a loss. Speaking differently, you will need a special setup that will make you win more often than lose.
Let’s dig a little deeper. We can understand the above-mentioned approach on the example of the support and resistance areas. As a fact, these are the areas on the chart where the prices have rebounded in the past. Moreover, the prices are most likely to reverse at those areas again at some point in the future. Yet, not all of these areas will see the rebound. This implies that the trader would not have much success just by buying at support or selling at a resistance. Additionally, it does not guarantee that would win more often than you lose.
The point here is that you need to wait for a strong prices action signal at the support and resistance levels. Then, you can have more confidence about the future movements of the prices. Such approach would most probably have higher odds of actually working.
You can have an edge by controlling the amount of money you can risk and having the trade setups that would deliver an adequate amount in case of winning trade.
2. How to win in bigger proportion in comparison to you average loss?
Some kinds of trades appear more difficult to confirm. Taking this scenario into consideration, it will be much harder to boost the odds of your trade actually working. However, it is not impossible.
The crucial thing to make sure of is that your winning trades bring more than your losing trades. For example, a breakout trader might be able to recognize setups with an appropriate chance of success. Yet, the odds of failed breakout are still very high.
While he can’t increase his chances of winning often, he would concentrate on assuring his winning trades have greater gain than his average loss. In other words, he would focus on searching for a greater Reward-to-Risk ratio.
The key to getting a Forex edge can be summed up by saying that you need to place the chances in your favor. The latter can be normally done by either boosting the amount that is won for every winning trade or increasing the chances of winning.
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