Every trader can earn decent payouts at times. However, the traders aiming to have a regular income from trading need a consistent profit Forex strategy. According to the experienced professional trader, who uses market research numbers approximately 33% of traders are capable to profit over a three-month period. It is fascinating to know that there are several ways in which a trader can improve his or her chances of earnings in Forex. In order to build some confidence and experience, there is a great need to back test this method for the past market performance.

• Setting realistic profit targets

Unfortunately, coming up with the right risk/reward ratios are not to be enough for forming consistent profits Forex strategy. Another essential aspect of this entire process is to set realistic profit targets. Every currency pair has a different daily volatility as there are daily fluctuations might range between 190 to 210 pips.

• ·Avoiding the use of high leverage

It is not a coincidence that a lot of financial commentators describe the leverage as a double-edged sword. However, the problem is overleveraged trading can easily lead to severe losses. These losses are very difficult to recover. For an instance, in the case of 400:1 leverage, just suppose that if the market goes against the opened position. It will be enough to wipe out the entire trade. In this way, a trader will lose his or her entire investment.

One of the essential steps towards possibly achieving a successful trading experience is to stay on top of the latest economic trends. It can be difficult to keep track of dozens of currencies while investing.

• ·Setting a risk/reward ratio to 1:2

There is a great need to know that traders are not necessarily guaranteed that they will achieve more than 50% of winning trades. However, one of the best ways to address this concern is to set a risk/reward ratio to 1:2.

For an instance, if a trader aims for gaining 100 pips from a given position, he might consider setting the stop-loss order below 50 pips. This strategy is very helpful in the sense because it enables market participants in order to earn decent payouts even with 40% winning trades. Along with this, it considerably improves the odds of success too in favor of a trader and can be a valuable insurance policy.

• ·Not investing more than 5%

Another significant element of a risk management strategy can be not to use more than 5% of trading capital on a single trade. There are professionals who recommend a much lower limit, at 1 or 2%. Keep in mind that the general consensus seems to be a maximum of 5 percent.

The reason behind this strategy is quite simple. Most experienced traders have several losing trades in a short period of time. just suppose that traders’ risk 50% of their account on one position as well as the market moves in the opposite direction. It means that they closed their positions and lost half of their investment.