TIPS: Maximizing Profits of Gold Trading Systems
1. Define Simple Trading Rules and Follow the Trend
The simpler the trading system rules are the better. If the Gold trading system rules too complicated, it will be very difficult to stick to the rules. Complicated trading systems are also very confusing. A simple Gold trading system makes it easy to follow the rules.
2. Eliminate Risk Quickly and Let Profits Run
Minimizing risk is far more important than making money when it comes to online trading. Our first objective in trading is to make the trade less risky. We do this by entering only high probability trading setups, setting stop losses, cutting losses quick and never averaging down, and letting the profitable trades run for a while, just long enough but not too long so as increase the profits. Profitable trades are only kept open as long as the system shows the trend is in place, these transactions should be closed immediately once your exit signal criteria is generated by the trading system.
How long you keep your trades open will depend on what type of Gold trader you are, If you are a day trader than you will only hold your trades open until the end of the day and close them at the end of the day even if the trend still shows signs of continuing - this is because you are a day trader and you will only hold open trades until the end of the day - you cannot just hold on your trades overnight just so as to let your profits run because that is not the trading strategy that is specified in your trading plan.
3. Choose the Right Trading Schedule
To maximize the profitability of your Gold trading system find the most active trading hours for XAUUSD and trade during these hours only.
4. Use Money Management Rules
Always risk less than 2% of your total account equity per trade transaction. With compounding, you will be surprised to see how quickly your Gold trading account grows once you start to trade with a profitable Gold trading system.
5. Keep a Gold Trading Journal
Keeping a log of all your trades will help you to become a better and better and will help you follow the rules of your system. A journal will also keep track of your profitable trades and losses and you can analyze why a setup was profitable and why it was not.
6. Set Take Profit Targets
Establish a daily, weekly or monthly profit targets. Once you hit this target. This will stop you from over-trading and will also stop you giving back your profits the currency market. Keep your reward to risk ratio high, a 3:1 reward to risk ratio is best. This means opening transactions only when you have the probability of making three times what you are risking.