My name is Usmar Ai And in this quick article, we’re going to be writing about seven Forex trading tips that will instantly improve anyone’s Forex trading results. I don’t care if you’re brand new to trading, if you’ve been trading a while, or if you’re just looking for your edge and finally looking to have your breakthrough with your Forex trading. I guarantee you this article is going to give you a lot of huge Epiphanies that will instantly improve your Forex trading results.
Forex trading tips to instantly improve your Forex trading results. And again, this will be different than most of the stuff that you’re being taught on YouTube and Google. It’s different than most of the retail or what we call the herd trading advice. Now, if you are interested in improving your Forex trading, we come out with articles all the time on this website to help make your trading ELF easy, lucrative, and fun.
So let’s go ahead and let’s dive into this right now. Seven tips to instantly improve your Forex trading results.
7. Is To Not Use Overbought and Oversold Indicators
This is totally different than what most people do. Most people teach some sort of strategy where you can just set it up and use an RSI or something like a stochastic indicator in the big problem with these overbought and oversold indicators is, is that you’re constantly trying to catch the tops and trying to catch the bottoms of the market, which means inherently you’re likely trading against the trend, which is one of the biggest pitfalls among retail traders.
And on top of that, there are smart money or the banks and the market makers. They understand that everyone’s looking at these indicators. So that’s why so often you see that these overbought oversold indicators don’t really do anything to tell us about future prices.
Overbought oversold indicators are simply telling us what’s happened. It’s a lagging indicator that kind of tells us what’s happened in the past. So if you’ll just stop, I know you may be thinking, well, how can I stop using this my whole straight? Well, if you’d stop using the overbought and oversold indicators, you’re going to have a lot more success and I’ll tell you what to do instead.
6. Is To Simply Trade With The Trend
Trading with the trend. You’ve probably heard this a million times. The trend is your friend. Why don’t people do it? Why don’t people do it? And I can give you proof that the vast majority of Forex traders don’t do it. Well, I don’t know. Maybe it’s because it’s hard to tell.
Is there a trend or whatnot? So we’ve made it really simple. I use this little tool called the bank secret indicator. I’ll put a link in the descriptions. You can try it for free for seven days and only pay for it if you really like it. But basically, this makes it really easy to see the timeframes and to see what’s happening.
If it’s blue on these bars, that means that it’s an uptrend. If it’s red, it means that it’s a downtrend. if I’m trading the H one timeframe, then I’m likely going to make sure that the timeframe above it is at least in the same direction. So I’m trading with the trend, both the H one and the H four.
And ideally, if it’s also in the daily, then that’s even a bonus, right? I can see that the H one H four and daily, they’re all in an uptrend, which means that I’m only going to be looking for buy positions. If you’re looking for sell positions, you’re shooting yourself in the foot. So don’t do that. Do you want to trade with the trend? Absolutely. The trend is your friend. This indicator makes it really, really easy to see.
5. Is To Trade The H One Timeframe Or Above
Why do I tell you to do this? Because this is what the smart money does. The retail traders are what’s called the herd or the uninformed. They like to trade the lower timeframes. Like they’ll try to use the M1 or M5, M15 But look, the reality is if you’re trading these timeframes, like it’s stressful, it’s hectic, your emotions get involved too much in these lower timeframes.
You make emotional decisions. And on top of that, it’s cloudy. It’s muddy. The zones are not really solid. They’re on those lower timeframes as they are in the higher timeframes, like the H one H four and the daily. I have a friend of mine that was a professional Forex bank trader for many years. He says that the banks, they really only look at the H four and the daily timeframe. This is where the smart money looks. So if you want to be like the smart money and unlike the 95% of the herd that loses money all the time, then only trade the H one timeframe or above.
4. Is To Use At Least A 1.1 Risk To Reward Ratio.
This is a huge flaw among so many Forex traders is that using skewed risk to reward ratios. Now, let me break this down for you with actual real data. Now here’s the problem. You can see that this data was pulled in from over 43 million trades that pulled in from different, retail, Forex traders.
And you can see that on the Euro us dollar here, you can actually see that the herd was able to predict a winning trade 61% of the time, which is great. I mean, so how, if people are able to predict winning trades the majority of the time, how come they’re not actually profitable? We know that the herd is 95% unprofitable or net losers.
If they predict it more than half the time, how come they’re actual losers. And the answer is, is because the losses were 70% bigger than their wins. The average losing trade was 83 pips. And the average winning trade was 48 pips in this 43 million trade simulation.
That was actual trades that came in from retail traders. As you can see here, this is the average loser versus the average winner. And you can see that the risk to reward ratio is all backwards, like really, really poorly backwards. Now simply just using a one-to-one risk reward.
The ratio has major, major advantages. If you look at this graph right here, you can see people that used at least a one-to-one risk reward ratio versus people that did not. And according to this data, it shows that 53% of all accounts that operate at least a one-to-one risk to reward ratio turned a net profit in this 12 month sample period.
And those who operated under a one-to-one risk reward ratio, a mere 17% of those accounts were profitable. So look at this simply by using a one-to-one risk to reward ratio, you’ll increase your odds drastically. You’re three times more likely to be a profitable Forex trader. If you simply use a one-to-one risk to reward ratio.
3. Is To Trade Contra Crowd
Now, what does that mean? Well, the market’s made up of two different players, right? There’s the smart money, which is the banks are the institutional traders. These are the hedge funds. These are the, the smart money, the people that are winning the majority of the time. And then the other side there’s, what’s called the herd or retail traders. And as we know, 95% of the herd are actual net losers.
So here’s an interesting concept. If we know that the herd is almost always net losers, why not just do the exact opposite, what the herd’s doing, and if you just did the opposite and you know, that they lose 95% of the time, the chances are you’re actually going to be able to win simply by trading against what the herd does. So I like to use this bank’s secret indicator. Like I showed you, you can use it from MyFXbook.
I think they have a tool as well, where it pulls in the market sentiment. Okay. And this is what I like to see here. So this is basically pulling in data from hundreds of thousands of retail traders, from MyFXbook, from different brokers. And it’s calculating. So you can see what the herd is doing. So in this scenario, you can see that the herd is 88% short and 12% long.
Now, if we know that the herd is vastly wrong, the vast majority of the times, then would it make sense that we’d only want to look for buy positions. Well, yes, absolutely. That totally makes sense. And you can pull this up on any timeframe and you can see what the herd is doing in this scenario.
You can see that the herd is short, right? You can see that the herd is shorted at 80% versus long 20%. Okay. And it doesn’t really make sense considering if you look at all the blue bars here, I mean, it’s pretty much in an uptrend on everything besides the monthly. So why would they be short? It doesn’t make any sense. And I’m going to talk about this and the (1 tip). So make sure that you stay tuned, but this is (2. tip) is to simply trade contract Crowd or against what the herd is doing, because automatically you’re going to align yourself with the smart money.
2. Is To Trade With Small Losses, But Big Wins
This kind of goes into the same thing that we’re talking about earlier about using a favorable risk to reward ratio. But the big problem is, is that people, they will essentially wait their fat tail risk, but they’ll cut off their fast tail rewards. So let me show you a graph to actually show you what I’m talking about.
So this little depiction here shows what actually happens. Most people think that their trading falls into a normal bell-shaped curve. Statistics go back to statistic class, basically, anything falls in a bell-shaped curve. If you look at babies Heights, the vast majority of Heights will fall within, YOU KNOW, one to two standard deviations away from what the median is here, right? Uh, if you look at incomes, it’s the same thing.
Pretty much everything in life follows a normal bell-shaped curve, but in the market, trading does not. There’s what’s called fat tails where this is the chance of you like having a big fat tail reward in your favor. And this is the chance of you having a big fat tail loss in against your favor. Uh, and you can see this red line is what the market actually looks like.
These huge fat tails do exist, and people tend to ignore this. So the problem is, is that people, when they’re trading, they’ll allow these fat tail risks to be there, but they’ll cut off their fat tail rewards. You’ve ever heard the, YOU KNOW, people talking about, you can never go broke taking a profit.
And the answer is, yeah, you actually could go broke taking a profit. If you have a poor risk to reward ratio and you don’t let your fat tail winners write out, but you let your fat tail losers drag on and an easy way to do this. If using these sort of Martingale or cost averaging system where you’re continuing to stack on losing positions when a trade is going against you, then you’re opening up this ability to lose fat like to lose the, YOU KNOW, have these big losses normal than bigger than normal losses.
And also, YOU KNOW, if you’re using a Martingale or cost averaging system use, you’re just trying to get a little bit of profit, right? Or you’re just scalping a little bit of profit. And again, if you have these small take profits in these large stop-losses, this is just a recipe for blow up, it’s going to happen. And again, why is that? So, because you’re limiting the fat tail rewards and you are allowing yourself to have access to the fat tail, losses, the extreme losses that can happen.
So again, the key here is to keep your losses small and to make your wins big. And how can you do that? One of the best ways that you can possibly do that is by trading with the trend, having a favorable risk to reward ratio, and actually using trailing stop losses. If you use a trailing stop loss, this allows you to trail. And if the market really goes in your favor on these big trends, which happens as you can tell what these fat tails are, then it allows you to capture the big fat tail reward end of the spectrum.
1. Is To Simply Do Not Try To Catch Tops And Bottoms
And this is it’s so aggravating because this is what the vast majority of people, teachers, they just teach you okay to buy low and to, to sell high, right? We’ve been taught that our whole life has been ingrained in our whole life. But the problem is, is we don’t know how low the lows are going to be and how high the highs are going to be.
So trying to time it can be disastrous for your Forex trading. And I’ll just pull this up to show you a quick example. If you look at the AUD USD chart here, you can simply see that this isn’t an uptrend.
It’s a very clear uptrend on the M one M five and 15 and 30 H one four eight for our daily, weekly. It’s all in an uptrend. But what is the herd trying to do? As you can tell, the herd is 80% short. What does that mean? The herd is thinking that the market has overextended and, , the market is overbought.
So they’re trying to sell, as you can see their short positions, 80% here, the vast majority of them are trying to sell. And this is why the herd gets hammered in these sorts of situations. When these trends occurred, they keep trying to catch the top, keep trying to catch the top, keep trying to catch the top until eventually they blow their account, or they have a huge loss that they incur.
So simply not trying to catch the tops. And the bottoms are an amazing idea because it keeps you trading with the trend. It allows you to have a favorable risk to reward ratio. And, it’s just something that’s automatically going to align you with the smart money.
So these are seven tips to instantly improve your Forex trading results.