A Guide for the novice trader to reduce risk and protect capital

When buying a currency pair and the price move up to positive 30 pips, shift Stop Loss to your Entry Price. In this case, no matter what direction does the pair heading, your CAPITAL is safely protected. As consequence, you will earn less or no win no lose when the pair is retraced or reversed. But you will not lose any money and your capital is there.

While market is consolidated in narrow range, now the pair is profit {Stop Lose is shift to Entry Price, the trade will no lose} but yet hit Target Profit. If the pair cannot break the current high (Long trade) or current low (Short trade) in three hours time, you should close the trade before incur any loss. The longer of range, the higher of chance for market to change direction, it’s not worth to give back the profit.

When the pair is breakout at critical point (Breakout for Long/Short), waits the price to retrace at least 10-20 pips. Wait for the price to confirm the direction, make sure it is not moving up instead heading down, you can enter Short trade. Long trade is vice versa. The benefit is you can exit the market earlier {capital is reduced} and profit more at least 10-20 pips.

Short/Long trade is moving in a narrow range, the account is profit but yet hit positive 30 point and the direction of market is coming back near Entry Price. Now close the trade without hesitate to prevent further lose. Wait the market to stable down before decided to enter market again, but the moment now is better than the previous, enter at better EP, SL can be reduced and TP can be more.

When market is moving in our favor, almost touching TP, we suggest using Trailing Stop Loss to tap profits along the trend. If the strength is strong, you can change TP to TP2 or TP3 or adjust the Trailing Stop Lose {suggest Trailing SL at 30 pips} to take more profit.

Even I can predict the direction of market around 80-120pips, but there is time I will make mistake too. The market always right, so you should keep your trading style more flexible.

A good advice for newbie: Don’t keep thinking of how much you want to earn forex, instead think a way to protect your capital. As long there is capital on your hand, there is always tomorrow in forex. Otherwise it’s time to say Goodbye to market.

Good luck to everyone!