Overtrading your forex account is the surest way not to succeed. Many traders approach the market as though it were some dartboard. You do not score points like that in the forex market. Forex trading is more like a hunt. Traders should be hunting for value or situations where they have an edge. These are what are known as high-probability trades.
Mr. Jordan Lindsey, the founder of JCL Capital, has long advocated that a small 7 percent return month after month can lead traders to financial independence. It is not uncommon for traders to hit a 7 percent return during the first week of the month, yet end the month down. Why is that? Most likely it is due to the problem of overtrading.
Greed motivates traders to open questionable positions all the time. The absolute reality is that most of these trades amount to running fast and going nowhere. Some will work out, and you will lose others. Novices compound the error by holding on to many of their losing trades, while at the same time cutting their winners prematurely. That must stop if you wish to join the ranks of consistently profitable traders (CPTs).
To master the art of detecting an edge in the market, you will need to become familiar with technical analysis. Once you have learned these concepts, you will be able to discern high-probability setups on a price chart. Then you will be armed appropriately to hunt down the 7 percent returns Jordan Lindsey recommends as a reasonable goal.
Another of Jordan Lindsey’s mantras has long been “focus.” Opening random trades on a hunch that they may work out is the opposite of what he has advised. If you are to build a fortune trading forex, you must first realize that good trades are few and far between. Their frequency will depend on the time frame you are trading on. Traders may see one high-probability trade a day or one a week. By only focusing on these types of trades you can increase your win rate from say 50 percent to 70 or 80 percent. Thus making your 7 percent monthly target that much more achievable.