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As a foreign currency trader, you’re gonna lose when you take these trades.  You’re gonna to lose often, too.  You’re going to get exhausted of losing.  You’re going to begin thinking maybe you know nothing about trading.  You’re going to question your capability all together and think about giving up.  Don’t. If you know you’re going to lose often in advance, why on connector would I tell you these are no-brainer trades you must take to skyrocket the equity in your Forex account?  It’s simple:  reward-to-risk.

Small, strategically-placed stop losses are the single most important key to your Forex trading success.  Why?  Because your success is always tied to the stop loss.  How much you can make on a trade is directly tied to that stop loss.  I love to show a tiny math with my writing so let’s get into this.

The basics you need to know are as follows:  statement base equity is $2000, you’re going to place a trade with a 100-pip stop loss and a take profit of 120 pips, and finally, you’re going to risk 2% on this trade or $40.  That means that apiece pip is worth $0.40.  Your potential acquire from this trade is $48.  Cool enough.  Let’s state you win this one.  Awesome.  You’re now rockin’ with a $2048 Forex account.  Life is good.

Now, let’s look at a series of trades with nice, tight stops.  You’ve got four trades here we’ll look at.  These all have 12-pip stops with, say, 60-pip potential.  These trades are not out-of-the-ordinary nor are they impossible to find.  Keep following me.  The juicy stuff is coming up right now.

The first three trades stop out.  Let’s look at the math.  By the way, I’m starting this one out with a $2000 statement just to compare the two sets of trades equally.

The first trade has a 12-pip stop at 2%.  That means apiece pip is worth $3.30.  You  always, always, always round down to the nearest dime anytime you’ve got under $100,000 in your Forex account.  You stopped out so you multiply that by your 12-pip stop loss and you’re out $39.60.  The next trade is worth 2% again, and since these trades could all be happening simultaneously, we’re going to make things simple and stick with the $2000 equity for all of them.  These pips are worth $3.30 like before.

Now your statement is at $1920.80 and you’re feeling uneasy about taking the next no-brainer, small-stop trade.  But, you do it anyway because some chic titled Caden told you to.  Here we go.

You’re risking 2% yet again and you’re still at $3.30 per pip.  Well, crap, this one stopped out, too.  You’re down $39.60 for a total of $118.80.  That’s about 6% of your statement gone in a short while.  Ugh, do you really have to take all of these no-brainer, small-stop trades?  Haven’t you suffered enough?

Yes, you do and no, you haven’t.  They are no-brainers.  That means you do it.  Period.  It’s a rule all foreign currency traders should follow yet so few do.  Perhaps that’s why only about 3% of Forex traders ever make any real cash in the foreign currency market.  Hmm…food for thought.

Let’s trade.

The final trade of the day is the same as the others:  12-pip stop with a 60-pip take profit.  This one wins!  Now, let’s do the math and figure this bad boy out.

You’re risking 2% again so your pips are $3.30 each.  You hit your take profit at +60 pips.  I don’t know about your math skills but mine tell me that’s a win of $198 on that stupid, no-brainer, small-stop Forex trade.  Let’s look a tiny deeper.

You won a 100-pip stop loss trade for 120 pips.  You got $48 and were happy with that.  Awesome…or is it?

You just took a royal bath with three losing trades in a row.  You were down $118.80 and feeling like a loser until you won that final trade.  After calculating your returns on those 4 trades which were a whopping 75% loss-rate, you’re up $79.20—far more than you prefabricated on that 120-pip acquire earlier.  Remember, that one was only worth $48.

You know what’s really cool?  You could even lose two more trades of the same type as above, win the 6th trade, and be at $2000—exactly what you started with!  That’s an 83.3% loss rate to come out at break even.  Are you kidding me?

This is just a small but vital secret you must always remember as a foreign currency trader.  The power of the small stop loss is huge, my friend.  Trade it like a organisation and it’s simple to watch your statement grow—and grow—and grow—and grow.

You get my point.  Trade it.

If you have traded in Forex before, or if you want to, one of the things you are going to need to know about is technical analysis.

There are two types of analysis you need to know about when it comes to Forex trading. Fundamental analysis is “big picture” analysis, whereby you take into statement a country’s social, economic and political health to determine the stability of its currency. A country that is stable in these areas is going to have a stronger currency, in general than a country that is not stable in these areas, and therefore a stronger country is going to be a superior bet when it comes to Forex trading.

What is technical analysis?

Technical analysis is a tiny bit different. With technical analysis, you examine a particular currency’s patterns and trends over a specific period of time. For example, if a particular currency has been performing strongly in its current history, it’s probably going to continue to do so. Similarly, if it’s been doing poorly in its current history, it’s probably going to continue to do that too. You chart currencies’ trends and patterns, and make predictions as to how a particular currency is going to continue to do against another. You place trades with “currency pairs” based on this information, in essence betting that one currency is going to do superior than another and therefore “winning” on that trade.

Does Forex technical analysis really work?

Absolutely, Forex technical analysis works to produce winning trades; many successful traders encourage taking a twofold approach by using both fundamental and technical analysis to determine which trades are going to produce profits.

Becoming an experienced Forex technical trader

To become an experienced Forex technical trader, you should learn your way around the Forex market by using a “demo” statement first. Most good Forex brokers will grant you to open a demo statement with no money; then, you “trade” in “demo” mode until you’ve become very experienced in placing trades. Once you begin to win on trades with this type of “pretend” trading, you can begin to place real trades with real money so that you can make a profit. It’s very important, though, that you do demo trading first. This gives you the opportunity to learn your way around the market just as you would if you were really trading, and it instructs you how to handle both wins and losses on trades.

What being an experienced Forex technical trader can do for you

As an experienced Forex technical trader, you have the opportunity to make trades based upon the patterns and trends you see (as well based upon your own gut reaction, once you become experienced), instead of on an emotional basis. Why is this important? Because if you make trades based upon an emotional basis instead of on what your data tells you, you’re going to lose on trades, and you might even lose your shirt. That’s a easy fact.

Trading based upon what your charts and data tell you, on the other hand, is simply smart. That means that you make decisions based upon data, not upon emotions. In practical terms, that means you might get out of a trade that’s still winning because your data tells you it’s time, or your data might tell you to get out of a trade that you’re losing on, even though your emotions would tell you to stay “in the trade” in the hopes that you could make back the money you have already lost.

Successful Forex traders know that they are always going to lose on some of their trades, but they follow their data, their charts and analyses, and they do what this information tells them. This helps them be successful because they win on more trades than they lose on – and that helps them break a profit and be successful overall. Learning Forex technical analysis can help you do the same.