6 tips to boost your trading profit in Dubai
As a trader, it is essential to maximize your trading income, and this can be not easy when you are trying to make money in one market and keep an eye on other markets.
This article discusses six tips that will help you boost your overall earnings.
Do not overtrade
The more trades they put on for the average trader, the better their chances of success. However, if you trade too often, risk-reward becomes unbalanced and reduces your returns.
The adage “less is more” comes into play here because the less risk you take on per trade means higher profits for every winning trade.
So in effect, if you reduce your number of trades and increase their size in value (less risk per trade), the total value of your trades will rise with a lower percentage of win/loss – that’s a simple physics fact.
Use stop losses when trading
It is another obvious one, but using stop-losses when trading can benefit you with more than two open positions.
So it may be worth closing some open positions to reduce risk until you have a clearer idea of how a market is going. It does not only stop on losing trades that are important, but also getting out at the right time on winning trades too.
So if you have four or more open positions and are all in profit, then get rid of 1 or more to even things up again (this tip assumes no overnight gaps between opening and closing trades).
Learn to take profits from winning trades
Some traders will hold a long position all the way up with a target of +20 or more points, then when they get there, they will look at how far away the next level of resistance is, and if it’s too close for their liking, they can sell half their position and let the rest ride.
The opposite applies to short positions where some traders will slowly lower their stop-loss as the price falls.
Still, this practice is risky if you don’t know what markets are doing behind the scenes (more on this later in point 9), so make sure you use either a trailing stop loss or set your stops manually instead of relying on software triggers.
Cut losses quickly
It’s essential to cut losses as soon as possible and before a trade becomes too risky, and two types of trades need to be stopped: those in loss and those about to become a loss.
So use tight stops on all trading positions and if you have the cash available, close it out ultimately – don’t try and salvage what little profit you may have made because this is where traders get into trouble.
Never risk more than 5% of your account on any one trade
It applies mainly to mini accounts, so that’s one lot in the case of the EUR/USD or AUD/USD. It can be tempting when you are in a winning trade to either add to your position or switch to a different currency pair.
Still, if this becomes a habit, you will end up with significant losses before long (because you never know which way the price will go).
The point here isn’t to risk 5% of your account every time you get stopped out (which would also be very annoying).
It means that you should stop trading after the first loss and look at what went wrong before risking any more money.
Always set stops on all positions
It goes hand-in-hand with point 3 but is important enough to get its point, so always set stops on all trades and never let a winning trade turn into a loss before you take profits.
If your stop-loss is triggered, then it means that something has happened in the markets which you don’t know about, and this was enough to make the price reverse against you – so why risk more money?
Retracement levels can also be used close enough to your entry point when trading swing positions.
For more information, check here.