To learn how to trade forex successfully, it is not something you do erratically. You must come up with a prearranged approach to forex learning procedure. You must plan for it, put it into practice, review it and adjust your learning plan as required. Applying this cycle of strategies on a constant basis will help you to gain the useful trading mindset and actions which would result in constant profits, which is the final objective of every novice trader. Learning what is required to be successful in any venture is significant and this is also applicable to the Forex trading market. To succeed as a trader, it is highly significant that you learn the way it operates, the different market features and how to leverage on them on them to gain profits on a regular basis. There are essential metrics that will assist you to learn how to profitably trade Forex.
We have provided below four significant metrics that every trader ought to watch out for and utilize to be successful in forex trading:
- Consideration of the Profit Factor
This is merely the standard profits from all the winning trades divided by the average losses from your entire losing trades. If your “Profit Factor” is greater than 1, it implies that your forex trading account is improving. On the other hand, if your profit factor is less than 1, it implies that your trading account is diminishing. Your aim should be to maintain a profit factor of 1.5 and above. Why the profit factor metric is very essential is that it can substitute the other metrics, including the “Reward-to-Risk Ratio” and the “Win-Loss Ratio”, because of none of them helps us to figure out whether the trader is making profits or not.
- Regular Pips per Day/Week/Month
This is the normal amount of pips the trader gains or losses across all his trades. As a day trader, your concentration ought to be on the “Average daily Pips. However, if you are a swing trader, your focus ought to be on the “Average Pips every Week. Position traders on the other hands need to concentrate on the “Average Pips per Month”.
The ideal yardstick to work towards is to gain an average of +30 pips per day for day traders, +200 pips every week if you are a swing trader, and if you are a position trader your goal should be to make +1,000 pips every month. As soon as a trader discovers his standard number of pips and develops confidence in his capacity to attain that average, again and again, all you are required to do is to raise your position size to enhance your potential profits.
- Execution of trades the way it is stated in your plans
This is perhaps only the one most essential metric you need to watch out. It is the percentage of trades that you execute the way it is stated in your plan against the percentage you execute against your trading plans. To be able to come up with this metric, you need to investigate and examine any trade you carried out whether it is for or against your plan. If you can, take a snapshot of the trade setup and store it on your computer as a picture file to enable you to review the trade eventually. Your target is to get the value that would be up to 95 percent or more as a novice trader if you are aiming to become a professional trader.
To be successful in the forex market as in every endeavor, you need to acquire the knowledge of essential metrics that determine your success. If you just delve into the market without first getting the required training on the rules of the game, you are accountable for placing losing trades. However, learning and keeping an eye on the above three metrics and making corrections where necessary would ensure your success in the forex market as a trader.