The Plan: How to Start Making Profit in Forex in a Month

The Forex Strategy to win

Forex Trading is considered to be difficult for beginners and 90% of retail traders(You and me) are losing money in Forex trading. The only reason people think that they lose in forex is that they don’t have a proper strategy or no perfect expert advisor.

In fact, the traders who lose don’t have a plan, as a result, they end up losing money.

Have you ever thought someone is making great money in Forex and you want to learn their perfect Strategy? As a beginner, I ran hopping on multiple strategies and signals based on other views.

Also, not every strategy can make money for you, and not even a good strategy alone can make money.

Have you ever searched for How to make money in forex? what is that profitable traders are doing which you are missing? The plan.

“Risk comes from not knowing what you are doing.”

-Warren Buffett

You might have been running behind a perfect forex strategy to make real money and win every trade you place. There is no such strategy.

When I was searching for such a strategy, I met a guy Travis on a forex-related Facebook page, he only trades to make 10 pips by scalping some arrow indicator a day and quits trading for that day and that’s his plan of action.

Is there any strategy that always makes a profit? No! Every strategy will have losses.

Ideally, It is the plan that makes us take better decisions even if there are losses.

Let us create a plan to turn our Forex portfolio to positive with three simple and doable steps.

  1. The Basics
  2. The Strategy
  3. The Plan

1. The Basics

The Forex market is a huge global market in the world. If you have to learn all the basics you will be going to take 2+ years easily.

It will be great if you can learn all the basics before starting trading in forex. I completely want you not to ignore the basics and daily changes in forex markets.

If you already know the basics of forex, then you may skip to the strategy part. As part of this plan, I wanted you to focus only on the basics required for your strategy. I want you to know where are you placing your money and how do you want to keep growing it.

As part of basics, please go through the topics like What is Forex Trading and why is it preferred for many over the globe. Besides refreshing yourself with topics like candlesticks, price action, and support and resistance will be a great help. These are very important for technical trading to identify opportunities.

You can use free Forex forums like ForexBatch, Soehoe, as well as education sites BabyPips, Forexfactory and there are many more.

Don’t jump to in-depth or advanced topics thinking that you want to learn everything and master everything which might end up in a waste of time. FYI Price action is a huge topic where a lot of traders are struggling to master it in order to make every trade profit.

Therefore, never waste your time on bundles of theory, instead invest the time in observing the charts.

2. The Strategy

If you are not a beginner, you might have gone through hundreds of strategies and backtested them and hopped to another strategy. Just note that every strategy makes money and at the same time they lose up.

There are lots of strategies used by traders in the forex market. There are people who use Fundamental analysis and trades news only and few who use Technical analysis to find opportunities and few stay away during the news.

You may use Fibonacci or Support and resistance or breakouts or Market Profile or Candle patterns or based on technical indicators or Renko bricks or any strategy. Before using it in Real accounts, I just wanted you to check what is the probability of your strategy. Based on the probability, we could decide what are your risk and reward ratios.

A simple tip to select strategy based on the statics by Forex Forecaster AutoChartist for last one year.

You may choose the one strategy and timeframe best suits for you. I prefer breakouts and correlation strategies as they work well for me.

3. The Plan

The Plan involves planning the risk and reward ratio. Your strategy may be winning 30% or 40% or 50% or 60% or 70% times. If you follow someone’s risk-reward ratio, you may not perform as expected.

Everyone wants a strategy that has an 80% winning rate. Even though you find that strategy, you may still face loss due to a bad risk and reward ratio. Do you know you can make profits even with a strategy that wins 30% with proper risk reward management?

Let us talk a bit about Math here. This is my favorite part and this changes how you make money with a low winning strategy.

Say if you are risking 10 pips for 10 pips profit(I mean 1:1 risk-reward ratio) and you are using a strategy that has a 30% win rate where you will win 3 trades out of 10 and will make 30 pips profit, 70 pips loss, and end up with 40pips loss in your balance(Also Spreads, Commission, and Swaps are added losses) because of which by a few days, you will be draining your account.

Now assume your risk and reward ratio is 1:5 for a 30% winning strategy as a result for every 10pips risk, you are expecting 50pips profit. You win 3 trades out of 10 trades as a result you will make 150 pips profit and 70 pips loss and end up with 80 pips profit(You might have to exclude broker commissions and swaps). Isn’t this working?

The higher the probability of winning, the lesser can be the reward ratio. In the above 30% winning rate scenario, if you have used the 1:5 Risk to Reward ratio, you might have observed the price almost moves near to your target profit level and came back without touch it.

So if your strategy is 60% or 70% winning, you can give a lesser reward to make your strategy winning most of the time.

Trading any strategy with proper Risk and reward ratio, you can clearly mint profits with forex.

Conclusion

Trading forex is never easy until you have a proper plan. Try this plan coupled with your manual strategy so that you can make the plan work. Trade only if you are confident about it. It is better to skip a trade than losing it. And remember, never rush for a trade.

Always try to calculate your profit at the end of the month or quarter. There may be days where you see only losses.
What is your opinion on this plan? Do you want to make money in Forex? When are you starting trading?