Trading Is About Being Consistently Profitable
Taking profitable trades once a while is something that almost all of the traders in the market achieve. But the key here is not to have just a few winning traders but to be profitable consistently. This is what will let you earn income through trading.
There are many traders who would be making huge wins but when you check their stats over time you will see that the profits are not consistent. They may be making huge wins in a particular month and losing out a good percentage in the next month. Thus as traders, you will need to ensure that your average returns are almost the same each month.
Identify what your profit zone is
This source will let you understand what the profit zone is. The support and resistance levels are important levels to let you take trades. However, it is also important that you pay a lot of attention to the where you would be taking profits. The trading opportunity gets created only when you have a profit zone and it is also important that the profit zone meets the risk and reward ratio.
You should thus stay away from taking trades where the supply and the demand zones are very close to each other. This is because it will not give the price enough space to move and will also cut some on your profits. This will result in the risk: reward ratio to not be met.
Take the maximum profits
The profit zone is where the potential for making a profit is the highest. The supply levels where the price starts to decline and this is where you take a short position. The demand level is the resisting level in this case and this is where you will be covering all your shorts.
It is important that before taking any trade you measure the risk and reward ratio. If you are looking for opportunities that offer you a reward to risk ratio of 3: 1 then make sure that the chart at least gives you a 4: 1 ratio. In this way, you will not be very adamant about taking trades at the peak of the level. So when the chart gives you a 4:1 ratio you are better off closing your position at 3:1.
Also, do not wait for the price to reach all the way to the demand zone to book your profits. This is because there is a lot of competition at this level and it could happen that you may not even get time to react here. So book your profits just before the price is about to reach the demand level.