Gaining a consistent profit from the forex market is the ultimate goal of every trader. However, consistent forex trading with profitable results is not easy and it makes the trader face many challenges. You need to overcome all those difficulties if you want to be a successful profitable trader. Trading is always difficult during the initial stage, but it gets easier after you gather enough knowledge and experience and become a consistent trader.
Why Consistent Forex Trading Is Challenging
Consistent forex trading is full of challenges.
There can be several reasons for a trader to not get a consistent profit, including –
Not Having a Proper Trading Plan
You cannot start trading in the forex market without having any proper trading plan. As a beginner, you must master your strategies and come up with a trading plan to begin your trading career. All successful traders consider their trades as a business and make practical decisions keeping emotions aside. New traders should study the setups and then make decisions to trade accordingly. It is a huge mistake to trade without being aware of the market conditions. If you do not at least have a rough idea about the outcome of the trade, the trade becomes too risky and you may end up losing your money on faulty trade setups.
Aiming for a Large Amount from the Market at the Same Time
One of the most effective ways to increase trade and profit, you should expect a maximum of 5% to 10% profit a month based on the money in your account. It is natural to think that only this much profit is not enough but it will earn you a consistent profit in the long run. So, traders must not aim for a large amount of money at the same time from the market, but many traders do this mistake. Also this type of gains usually happens in specific volatile days, while most of the time traders can face much lower gains.
Not Observing the Markets
It is important to focus on more setups if a trader is holding a position for a longer term. Choosing trade at a lower rate on small setups is only useful for those traders who do not go for a longer timeframe. Not being patient and observant of the markets and setups regularly can prevent you from trading with the best patterns and gaining a consistent profit.
Not Using Price Action
If you are in the forex market and want to know it better, you should study the price action. It helps you get the previous record of the trade’s different setups, as well as its financial status so you can predict its future status in the market. You can get a clear idea of risk in the market with the help of price action. When you observe the price action and get close to the market condition, you can gain a consistent profit. Not using price action can be a big reason for facing problems in the market.
Strategies For Consistent Profits
The London Breakout Strategy
The basic concept of this strategy is that the direction of the day is set on several trading pairs at the start of the London session which is 8 am British Summer Time. To employ this strategy, you need to open the one hour chart of the pair you are interested in. At the same time, you must mark the high and low for the day.
The EMA Crossover Strategy
The EMA (Exponential Moving Average) is one of the best technical indicators in forex trading. It allows you to get a directional bias on any chart and you can do it by taking just one glance. Two EMAs of higher and lower values are deployed by EMA crossover strategies. After that, you can take a position in the market according to the direction of the crossing.
Gann Trend Following Strategy
This strategy uses a technical based on the angles of William Delbert Gann to determine the next possible direction of the market. To employ this strategy, you may need to download a technical indicator for the trading platform. There are many Gann related indicators for MetaTrader 4 that you can download for free.
Support and Resistance Strategy
It is a powerful range trading strategy that attempts on predicting where the market will possibly turn. Here, the logic is that the market turns bullish at a support level and bearish at a resistance level. So, you have to enter a buy trade at a support level and a sell trade at a resistance level. You can use many tools to establish the support and resistance levels, including Fibonacci Ratios, Bollinger Bands, Pivot Points, and more. You must research on the methods extensively before choosing one.
The pinbar strategy uses a section of Japanese Candlesticks for guessing future price movement. Here, the logic is based on the pinbar indicating when the market is going to change direction, like an arrow that is created by the behaviors of market participants. It is often used combined with other strategies like Support and Resistance for a higher probability of success.
Bollinger Bounce Strategy
Bollinger Bands is a powerful technical indicator that traders have been using for decades. It creates a channel nearby the market movements on a chart. If the channel touches the lower boundary, then it is possible that the lower band is likely to act as a support level and cause a reversal.
Bollinger Breakout Strategy
This strategy is also based on the Bollinger Bands. It is designed to assist the trader in finding the start of a new trend. The Bollinger goes into a squeeze before the trend starts. A break of it in any direction indicates the possible start of a trend.
While using a forex trading strategy for consistent trading, you must be realistic with profit targets and embrace money management. You can experiment with timeframes as well. Keep in mind that any strategy, regardless of how good it is, can fail matching your expectations. Lastly, while trading keep your emotions in check.