Forex Day Trade Strategies: Maximize Your Gains
If you have been trading the currency markets for any length of time, you will probably know that just adding one new forex day trade strategy can often make a huge difference to your bottom line. Even something that seems like a tiny adjustment in the way that you execute your trades can open up the way to much bigger profits.
Here is one technique that may do just that for you, if you implement it right. It’s a method that you can apply to profitable trades to maximize your gain from each one.
You will have heard over and over that you must not hang on to a winning position beyond your profit target out of greed, hoping to make more money that you need. Well that is true, but at the same time there is something you can do to take advantage of those times when the trend is pushing on more strongly than you expected. It is a great tactic for day trading although it would be equally valid for a longer term trade. I call it ‘trimming the scalp’.
All you have to do is when your trade reaches your profit target, close one half of your position. Of course this assumes you are trading two lots or more, or have a broker who accepts fractional lots. This gives you the flexibility that you need.
So, exit half of your position. At the same time, of course, amend your stop loss order to one half of the original size too. You can also move the stop loss to your original trade entry position plus or minus a couple of pips to take account of spread.
You have now closed on half of your profit target, plus you have a half size order open in the market that cannot lose because its stop loss is set at point zero. Set a new price target and place a limit order at that point. It could be the same number of pips as your usual price target or a little less. Don’t make it more.
However, if you have a losing trade, do not try to apply this same strategy. Never hang on to even half of your position in a losing trade. Remember, this strategy applied to winning trades will maximize your wins. So if you apply it to your losing trades it will maximize your losses … not a great idea.
If you apply this ‘trimming the scalp’ forex day trade strategy over all of your profitable trades, the effect should be to increase your average gain per trade without affecting your losses.
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