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How to maintain a high risk to reward ratio in each trade

Becoming a profitable trader in the Forex market is a very tough task. You might have in-depth knowledge about this business. Even so, you may have to lose many trades. Professional traders can make consistent profits in the retail trading industry because of their experience. They have spent a decent amount of time in the demo trading environment to master the art of trading.

Being new to this market, you might be thinking that trading is an easy task. In reality, it is one of the most complex tasks in the world. You need to manage your trades in a very strategic way and trade the market with a proper risk to reward ratio. In this context, we are going to give you some amazing guidelines that will allow you to maintain a safe approach in trading.

Choosing the asset

The majority of novice traders fail to choose the asset in the correct order. They select their trading instrument randomly and execute their trades without doing the proper data analysis. To make a consistent profit in the retail trading industry, you need to have strong analytical skills. You should pick your trading instrument very wisely or else it will be really difficult to find the best possible trade signals. Instead of taking random trades in the cross pairs, you should work hard to find the trend asset. By picking the trending instrument, you should be able to maintain a decent risk to reward ratio in each trade.

Try to ride the trend

To maintain a high risk to reward ratio in each trade, you need to ride the trend. Those who are new to the concept of trend trading techniques, may find more info about the trend trading strategies at Saxo and enhance their skills. After learning the basics of trend trading techniques, you should open a demo account with a high-end broker. Try to ride the major trend in the demo trading account. Once you learn this technique, you should be able to ensure a decent risk to reward ratio in the trades. Instead of trying to use the trailing stop loss, use the fixed stop loss. Try to simplify your trading strategy so that you can easily earn more without having any major trouble.

Use simple price action signals

You must learn to use the price action signals from the start. If you manage to trade the market with the help of a price action trading strategy, you should be able to earn more money by using the tight stop loss. Once you trade the market with a very tight stop, you can easily increase your risk to reward ratio. Some of the traders often trade the market with the indicators and expect to ensure a high risk to reward ratio in each trade. By using the indicators you might be able to filter out the bad trades but this is not the solution. You need to have the skills to use the candlestick patterns and only then you can find reliable trade signals in the market.

Know your weakness

Being a new trader, you need to know your weakness. Unless you become skilled in analyzing your weakness, you will never learn to take your trades with a high risk to reward ratio. Try to maintain a trading journal so that you can fix your faults at any moment. At times, you might get stuck with the problems and in such a case, you should take a small break. Never think you can fix the problems within a short time. Based on the severity of the problem, you need to take the necessary steps and only then you can ensure quality trade execution. After fixing the problems in your trading method, you need to test the efficiency of your trading strategy. Without gaining enough confidence about the market, you should never switch back to the real account.