3 Ways to Get Consistent Trading Profits

By Joshua Geralds

Forex trading is deemed to be difficult by many traders because of the equity curve. An equity curve is your profits against your losses. It shows your profitability against your total losses (drawdown).

All traders want a smooth equity curve; this shows that profits have been steadily increasing and that there is regular income. This is crucial if you wish to succeed as a trader, trading for a living.

The challenge that most new traders face is how to get into the rhythm of achieving a smooth equity curve. Here are 3 ways to help you manage that!

1. Set a stop loss. This is an important step you have to take. There are traders out there who claim that they never set a physical stop loss. I tell you now that a stop loss still exists for them. Although it is not a physical but a mental one. When you place your trade, assuming you follow a set of money management rules, the percentage would be from 1% to 5% of your total account. For the traders that claim not to have stop loss they will stick to this percentage and should the market turn drastically against them, there will be an automated close (margin call) from the broker. This is a stop loss measure, so a stop loss will always exist regardless of what the trader does. If you wish to achieve consistent profits you will have to plan in all uncertainties in the trade. Thus you will have to factor in the losses as well as your gains. Once you factor in your losses should you really lose it is of no consequence. This is because the loss was planned for and prepared for.

2. Set a profit objective/target. Once you have done the right thing by planning in your stop loss you will now factor in how much you intend to make per trade. For ease of calculation use pips instead of the dollar value to represent your profits. A good rule to follow is to have a ratio of about 1: 1.5 or 1:2. That means for every dollar you risk, you have the potential to make twice that amount. This is a lot of common sense. You want to risk only a small sum to achieve greater returns. That also makes trading so profitable and exciting! It also ensures that you have a smother equity curve. Just image that if you risk 1 pip and your returns are also 1 pip, you basically won't get any where and most likely you will end up dying a slow death as the market eats up your wins and erodes your account.

3. Discipline. There is a lot to say about discipline. The main focus of this article is not on the subject of discipline. Instead it is to help you achieve consistent profits. Discipline to trade your plan and the discipline to ensure you have the guts to stay the trade is equally important. You can build discipline in various ways, but one of the best ways is to take up a physical sport and stick with it. You will get fit and healthy and at the same time you will be able to use the discipline acquired in the course of your physical activity towards your trading.

The 3 above mentioned tips will assist you in having a more consistent profit. That in turn will lead you to a faster growing account. Very soon you will be staring at a huge account because of compounding. So these 3 ways to achieve consistent profits should be at the top of your mind when you trade.

Dr. Joshua Geralds is a successful Investment Specialist with over twenty years experience increasing the income of people world wide. Visit http://www.pipsalot.com to learn how to make steady profits through safe trading and down load your FREE e-book "Money Management" for a limited time only!