This is another question from our fellow trader.
Below is the question:
Hi there in finding a method to consistency what are the best methods ie. candlestick, elliot wave, moving average trades etc which one is the best for each different market or is it a case use them all and just trade what you see?
Personally I always suggest you to specialize in one specific market condition. Let says that you are interested in trading the trend, you should stick to trading the trend and eventually become a specialist in this area. If you are interested to trade the reversal, you should focus on trading the reversal of the market and similarly become a specialist in it.
There are a lot of ways to trade the forex market and it is impossible to be able to trade all the different methods. Actually when I first started to learn forex trading, it is very tempting to learn all the various different way to trade as I hope that I can at least enter a trade everyday so that I can make money everyday.
This mindset is entirely wrong. When you learn so many different strategies and do not specialise in any, you are likely to get into a lot of losing trades. The worst thing is you will get very confused as there are trades that is opposing each other.
To be a successful trader, you do not have to place at least one trade per day. In fact, you just need a few winning trades per month to become a full time forex trader.
You have a capital of $20,000 and you have a strategy that can make you 3 winning trades out of every 5 trades with a risk reward ratio of 1:2
For every trade, you risk 3% of your account which is equivalent to $600 per trade.
Your target profit per trade is $1,200 based on the 1:2 risk reward ratio.
Let says that you have one trade per week, you can make about $3,000 per month with a capital of $20,000.
Imagine you can grow your account to $50,000, you will make $7,500 per month. The key to successful trading is not on the frequency of trade, it is in your risk reward, winning percentage as well as capital.
I hope that I have shed some light for you and I hope that you understand what I am trying to convey in this post.