To be winning in your trading, you need to follow the two rules:
- minimize your losses;
- maximize your profit from the trade.
To make profit by the end of a month, you don’t need any ultra-winning strategy or an AI robot. It might be enough to use just four tricks that distinguish an experienced trader from a newbie.
#1. Know Where Demand and Supply Is
The supply & demand areas are the most important levels in the chart. They are also known as ‘support and resistance’.
Trading systems are made up around the SR areas. The supply and resistance used to work in the 20’s century, and they still keep working today:
Demand area reverses the price upwards, while supply area makes the price drop down.
Traders find demand areas to make a buy trade, and then make a sell trade at supply areas.
In the chart above, we have shown how sellers got carried away with sells and kept shorting at the bottom of the market, right into the demand area. Two candlesticks helped forecast an approaching reversal upwards [see the ‘False breakout 1’ in the chart]:
Candle 1. A large red candlestick appeared: sellers got carried off with short sells and forgot about the demand area.
Candle 2. The red candlestick was followed with a large green one: buyers rebuffed the relaxed sellers.
This is how false breakout was generated at the demand area. For a trader, this is a signal to open a buy trade. Normally, the risk-to-reward ratio in trades made at demand & supply areas is 1:3-1:5.
What we took in our case was 1:5 — we bet $10 and earned $50:
Trick # 2. Optimize Stop Loss: reducing losses
When you open a trade, there are 3 levels that you manage:
- entry price level;
- Take Profit level;
- and Stop Loss order level
Each level may be optimized, i.e., set up to make the most of the deal.
Stop Loss Optimization
We are certain that only one-fifth of traders is aware of optimization of Stop Loss, the trade risk:
How to reduce Stop Loss
The Stop Loss purpose is to limit the risk in the trade. Whenever you open a trade in Forex / cryptocurrencies / stocks CFDs, you are risking with your entire deposit
Stop Loss was made up to protect you from losses. As soon as the price reaches the Stop Loss, the position is closed, and your loss will be limited to just a fixed amount.
If you avoid setting up Stop Loss, you may waste your entire deposit during just one trade.
Where Stop Loss is Usually Set up
Traders are likely to hide stop loss in key spots in the chart:
- behind round-number levels;
- behind demand & supply areas;
- behind indicators and technical tools, such as trend lines, Fibonacci retracements, and pivot points.
Guidelines on how to hide Stop Loss:
- Line out demand & supply areas in the chart.
- Find the reversal candlestick.
- Hide the Stop Loss behind the D&S area / round-number level / shadow.
- Set up the Take Profit at the next D&S level.
In our example, the trade would result in a risk-to-reward of 1:3 — we risked $50 and we earned $150.
Trick # 3. Do the Trend Trading and Increase the Profit
Let’s get back to the example:
The price fell back to the supply area, the reversal candlestick appeared, and the price went down along the trend.
This is what 80% of your trades must be like, no kidding. Area, Trend, Setup.
A trend is what drives the market and its players. A trend doesn’t care a straw about areas, it breaks through them with no effort:
A trend is your friend. Until it is over
When you do the trend trading, don’t get carried away, to avoid being tricked by false breakout. Use the Take Profit to lock in your profits at the demand-&-supply area:
- We bought at the demand area.
- We hid Stop Loss below the area, behind the round-number level.
- And we sold at the supply area – using Take Profit to lock in the profit.
If the price broke through the area and went further along the trend – that’s okay. You’ve got your profit and you are waiting for a new entry.
How to Optimize Take Profit
Use the same concept as for the Stop Loss:
- Set the Take Profit at the demand-&-supply area.
- Or at the round-number level.
If you enter the trend, don’t be afraid to set Take Profit somewhere farther away. But if you enter against the trend, you should close the order at the closest barrier in the chart:
- set the Take Profit at supply and demand areas and at round-number areas, when you enter the trend;
- set the Take Profit at the nearest barrier, when you trade against the trend.
Trick # 4. Optimize SPREADS
A spread is a difference between a buy price and a sell price:
The spread at the screen shot above is 20 pips. If we open the lot of 0.01, we’ll spend 20 cents. If we open the complete lot, we’ll spend $20.
A spread depends on the volume of the trade.
Traders don’t fight with spreads. As a result, in a couple of months they lose 5-20% of profit, depending on the market and on how often they trade.
How to Save on a Spread
Until recently, traders were not able to optimize spreads. Now brokers offer cashback under the following terms:
You trade often and trade big volumes – and we’ll give you back a part of what you’ve spent on spreads.
Currently, AMarkets offers a five-level cashback program:
5 lots per month — from $3 to $14 per lot
Month One. You have traded 10 lots and you’ve received $30 onto your account.
Month Five. You have traded 10 lots, and we’ve given you a $140 refund.
To avoid losing on spreads, here’s what you need:
- To be our client or to open an account.
- To trade as least 5 lots a month.
Each month, the level of cashback grows, and so do your payouts.
The money is refunded onto your account as a bonus. You can use it to trade and to withdraw the profit without any ‘materialization’ of ‘turnover’.
Cashback is the only way to optimize spreads
Free tricks for profitable trades – what else do you need?
Now you know the 4 ways to hack your trades:
- Trade at the demand & supply areas. Buy cheap and sell for more.
- Reduce Stop Loss. Don’t risk too much in one trade.
- Increase Take Profit: do the trend trading.
- Don’t waste on spread. Save with the cashback.
Traders are likely to neglect life-hacks and do not use them too often. But actually, these tricks are quite simple and you can put them into practice right away on the demo account.
These tricks will improve your trades. One decent trade is better than ten insecure trades, right? So, don’t postpone learning these tricks.
Why should you open an account in AMarkets?
- Over 250 000 traders are already trading with us;
- AMarkets is an A Category member of The Financial Commission; the compensation for clients makes up to €20.000 per each complaint;
- Over 250 financial tools, such as currency pairs, shares, cryptocurrency, stocks, and much more can all be found in one place.
Analytical reviews are a reflection of their authors’ subjective opinion and are not a call for action. AMarkets shall not bear liability for any possible losses that might arise out of using the materials of this review.