A simple way to make money in the foreign exchange market

Why are so many people losing money in the foreign exchange market? It's because they haven't learned how to make money yet. Why do some people still lose money after years of trading foreign exchange? It's because they still haven't found a way to make money.

Is making money in the foreign exchange market that complicated? It takes several years to learn. Why do beginners often make a fortune. In fact, studying for a week is enough to make money. The key is that this method must be correct.

What is the correct method for trading foreign exchange? Then you have to ask the people who can make money in the foreign exchange market. Note that you must listen to what they say. I think only those who can make money have the qualifications to speak, and only what they say is useful to you. 99% of those lengthy essays written in fancy words are useless to you, only 1% are useful to you. Can you extract what is useful to you from this 1%? If you can't, I still advise you not to look good. People who can make money do not have the habit of writing foreign exchange reviews, and often people who cannot make money like to talk.

The key to the problem lies here. There are always very few things that are useful to us, and there are so many things that we don't use. So what are the things that are useful to us! At first, I didn't know, otherwise I wouldn't have taken so many detours. It all depends on my own intelligence. We should carefully read what is useful to us and double our collection of high-quality products. There are many people on various foreign exchange forums who selflessly share their good things. I am very grateful and have learned a lot from it. I also have an obligation to write something for everyone to discuss. Many people are studying very hard, and I have also studied very hard, studying technical indicators, wave theory, and blindly believing in operational advice.

First, follow the trend

Following the trend is the most direct manifestation of the law of market movement, which is the trend. The only way to treat the trend correctly is to operate in accordance with the trend. This is the first magic weapon for making money and even long-term survival in a speculative market.

Stanley Crowe, a famous investment expert in the United States, once said, "The most profitable and reassuring operation is always when I follow the trend at that time. The most painful and stressful operation is always when I establish or hold a losing position against the trend." When beginners learn to trade, they need to understand that establishing the direction of price operation is of great value for the success or failure of the overall trading situation. Determine the direction through objective analysis, then jump into the trend and stay in it all the time, drifting with it. As long as the trend continues to be beneficial to oneself, one must hold onto their position tightly to reap profits. Learn to trade in the direction of trends and achieve excellent operational results through risk management during this fluctuating process. This is the essence of following the trend.

For beginners, the recommended analysis tool is the moving average. As a concise and clear trend indicator, the moving average has a remarkable effect in following trends, thus gaining the favor of practical experts.StoneFor specific applications, please refer to the Grampus moving average eight rule and triple filter investment theory.

Second, grasp the big and let go of the small

Beginners who have just started trading should pay attention to cultivating a systematic trading mindset at the beginning, not counting temporary gains and losses, but striving for long-term stable overall gains. To do this, you must learn to choose among many market opportunities, seize big opportunities and give up small opportunities. Therefore, the two core factors for evaluating opportunities, namely risk-reward ratio and success rate, must be firmly grasped, which is the second most powerful magic weapon for beginners to make money.

The so-called risk return ratio refers to the ratio of the potential risk loss and expected return of a transaction, which is the risk return ratio. For example, if we plan to execute a transaction and analyze it, if our estimated potential loss value is 100 points and our profit target is 300 points, then the risk return ratio of this transaction is 1:3

The so-called success rate refers to the probability of a successful transaction yielding profits. For example, if 5 out of 10 trades are profitable, the success rate is 50%

Suppose our risk-reward ratio is 100 points: 300 points, and the success rate is 70%. This means that when we make 10 trades, each time we make a profit of 300 points and lose 100 points, the overall profit will be 300x7-100x3 = 1800 points.

Suppose our risk-reward ratio is 300 points: 100 points, the success rate is 90%, each time we lose 300 points, and each time we make a profit of 100 points, then in 10 trades, the overall profit will be 100x9-300x1 = 600 points.

Considering these two core factors, a transaction with a smaller risk-reward ratio and a higher success rate is what we should strive for.

3、 Limit loss

Limiting losses, preserving principal, and holding positions with profit potential for as long as possible under this premise to increase profits is the third magic weapon for speculation to make money.

In the world of trading, there is no "holy grail" where all predictions are 100% correct, and all analytical predictions are a possibility. So, for market uncertainty, we must take measures, such as using stop loss orders to control risk. Imagine the market risk. This crocodile lurking in the mud bit your foot. If you can't bear to give up this foot, the crocodile will devour your entire body. Risk follows closely with traders, so beginners need to have a clear understanding of risk. After setting a stop loss, traders will have a clear quantitative understanding of the bottom limit of losses, which is beneficial for maintaining a stable trading mentality.

While limiting losses, it is necessary to learn to make money by holding on for a long time to compensate for losses caused by mistakes. Only by holding on can one make big money, and only by making big money can one make up for the losses caused by a large number of mistakes and have a surplus. These surplus parts are the final trading profits.

Investors who do not know how to stop losses will definitely suffer losses, and investors who only know how to stop losses will also suffer losses. Only investors who can both stop losses and make profits can taste the taste of long-term profitability.

I think learning how to trade foreign exchange requires thinking more and relying entirely on your own efforts. I see that every night before going to bed, I close my eyes and think for an hour, thinking about the essence of the foreign exchange market and the mentality of individual investors in the market? What is the mentality of the main force? If you want to make money, you must put in a lot of effort. It's best to spend 2 hours studying every day, half a day on weekends and Sundays. It's not that the methods of making money take a long time to learn, but rather that it takes a long time to find the little useful ones. It all depends on one's own understanding. Forex trading is a skill that can only be learned through hard work. If someone doesn't tell you how to make money, it's useless to tell them because it's their way of making money.

Note that mindset comes first, strategy comes second, and technology comes third.