Lots of people who trade forex will try out many different trading systems in order to find one that is consistently profitable. They will play around with many different indicators and become increasingly frustrated if they still have no joy. However there are three basic things that you can do that may well help you generate more profits from your trading.
The first thing you can do is to forget about the idea of becoming a day trader. So many people are drawn to this fast and furious style of trading, but as many experienced trader will tell you, this is one of the hardest ways to make money.
When you have spreads of up to 5 points and somewhat random price movements at times, it is not easy to call which way the markets are going to go. You also have economic data releases to deal with, which can move the markets in an instant and render all your technical analysis to be a waste of time.
You are better off lengthening your time frames and trading the 1 hour, 4 hour or daily charts instead of the 1 and 5 minute charts, for example. These time frames are a lot easier to trade because technical indicators are more reliable due to less noise, and you can still make a lot of money because the price moves can be very big.
Another thing you can do is to start managing your trades better. In other words you want to be cutting your losing trades early and letting your winning trades run for as long as possible. So for example if your stop loss is 40 points, then you would want to be targeting 100+ points in an ideal world.
The benefit of doing this is that you can still make decent profits without necessarily having a really high success rate. Some of the best traders around never let their losing trades accumulate. They simply take losses early, safe in the knowledge that they will still make money in the long run because their winning trades are a lot bigger.
The third and final thing you can do is to interact with other currency traders every day. You will probably already know that it is possible to spend hours and hours each day staring at your screen, waiting for the next set-up and not really doing much.
So you might as well make use of all this free time to chat with other traders on chat rooms and forums. That way you can pick up some useful trading tips and strategies and hopefully help develop your own winning systems, particularly if you take some time to identify some of the best traders on these forums, and therefore the ones worth listening to.
The point is that trying to carve out a successful career for yourself as a forex trader is not easy. You need to work at it constantly, and even if you do develop a winning system, you can still end up losing money if market conditions change. However if you follow some of the tips mentioned in this article, you will certainly increase your chances of success.
James Woolley is an active forex trader who also runs his own forex trading blog. Click here to learn all about Forex Profit Accelerator, which includes four highly effective end of day trading methods, and to read a full Forex Morning Trade review to learn about a profitable early morning breakout strategy that you can use to trade the markets.