You can spend the next few years trying to find indicators that work 90% of the time but by the time you find one that does work 90% of the time the market dynamics change and it no longer works. You need to use a system that is simple and provides you with an opportunity to have at least a 50% to 60% rate of success and one that you own emotionally and can move with market dynamics.
A 50% to 60% success rate can see you make a killing in Forex. It’s then down to your money management and how you execute. Professional traders are amused
and amazed by the the millions of Forex traders trying to find signals that work 80% or better, while they ignore the amazing profits with much smaller odds of success.
We have already covered the type of trade set ups you should be looking for, i.e. taking trades following large time frame trends on 1 hour charts or larger. The next question is finding a strategy to trade these time frames that will allow you to trade with big money. The following are some popular strategies which professional traders use to make a killing in trading Fx.
Fibonacci
Fibonacci is a very simply system used by many big money traders to enter trades, usually off 50% or 61.8% retracements, giving them an entry to go with a trend. Candle stick formations on larger time frames such as engulfing candles after pullbacks also work extremely well, but only with trends. They are simple yet highly profitable. One other type of trading system often used by big money traders is wave trading. Essentially, the market likes to move in 5 wave formations and waves 3 and 5 are usually the strong trending waves. A combination of a Fibonacci retracement and an entry on a wave 3 or 5 is your start to making a killing trading Forex.
News Announcements
Many big money traders will also learn how to trade news announcements such as interest rates, employment and jobs data. This is a skilled and highly lucrative strategy if you are able to build your knowledge and network base to understand how to read a news announcement.
The way banks and big money traders will trade news announcements is like this … Senior economists and advisors will usually have their own view and expectation on what an announcement will be and therefore the market will have a bias. For example, an interest rate announcement may be due to come out and the expectation is that the Federal Reserve will leave interest rates on hold. If the announcement is different to expectation, then banks and big money traders will
step in and usually make a killing going against this news. Often they will wait days and weeks just for one set of data numbers and if they are not in line with expectation they will enter large volumes.
This is not easy to learn on your own, however if you are trading with a team of professionals (more on trading with a team shortly) you can learn this technique and potentially make a killing as banks and big money traders often do trading on news.
Getting the Edge
It is a myth that to make a killing as a currency trader you need a sophisticated and top line secret trading system that is near impossible to find. All you need is in fact finding a strategy that works better than 50/50, and this is not very difficult. Managing it, tracking it and trading it is the challenging part, but finding it is not.
What you need is something that has an edge and your success will be determined by how you play the edge. Make sure the edge is trading with the big money, big trends, big time frames and strong on risk vs reward. Those principles applied daily can have a radical shift in the profits that come into your trading account. This is how banks and major money makers in Forex trade and their systems are not anything secret.
