16 Questions on Forex Basics (Part 2)

9. How to Set Reasonable Stop-Loss and Take-Profit Levels?
   Answer: Stop-loss and take-profit levels are major concerns in the market, but few can manage them perfectly due to insufficient technical or fundamental skills or other factors. This takes time and practice. Generally, stop-loss ranges are 50-120 pips for short-term, 80-160 pips for medium-term, and 200 pips for medium-to-long-term trades. The key is finding a reasonable entry point, making stop-loss easier to set. Regardless of the trade type, a small stop-loss is sufficient, usually placed beyond support or resistance. Take-profit targets are typically 80-120-200 pips for short-term, 300-500-800 pips for medium-term, and 1,000+ pips for medium-to-long-term trades (long-term trades are not considered). Take-profit levels should be set slightly inside resistance or support to increase the likelihood of success. Additionally, consider the currency’s volatility and aim for the average statistical range for safety.

10. How to Manage Wave Trends in Different Market Conditions?
    Answer: Trading prioritizes primary and secondary trends. First, confirm the primary trend—this is the main wave trading. For example, if the major trend is bearish, focus on key resistance points during rebounds to short. Secondary waves are rebounds; unless well-timed, they’re less critical. Missing a rebound is fine, but don’t neglect the primary trend for secondary ones, as it’s counterproductive. The same logic applies to bullish trends. Ensure the majority of positions align with the primary trend—don’t reverse this, or profits will be hard to achieve.

11. How to Improve Trading Skills?
    Answer: Becoming a skilled trader takes years, not months. Key steps:

• Study relentlessly.

• Learn to plan strategies.

• Master discipline and control.

• Overcome psychological barriers.

• Read useful books.

• Trade more, reflect more.

• Draw charts frequently.

• Stay informed.

• Stay optimistic.

• Analyze data statistically.
  Believe in gradual improvement leading to breakthroughs—but only with the right mindset. Wrong approaches yield poor results. That’s why it’s crucial to find the right mentor, industry, and methods.

12. On Trading Frequency
    Answer: More trades mean more mistakes. But no trading isn’t wealth management either. Trading includes opening positions, waiting, and resting—all part of the process. Rest when needed; never force trades. Only trade what you understand and accept losses reasonably. We recommend no more than 35 trades per month (short/medium-term combined), especially for beginners. Experienced traders can adjust slightly, but exceeding 80-100 trades monthly guarantees failure. Many traders exceed these limits, leading to losses. Regularly review your results to adjust behavior and thinking. Pure medium-term traders may only execute ~10 trades monthly, while long-term traders might make just dozens per year. Newcomers: keep your hands off the keyboard—don’t trade impulsively.

13. How to Identify Interim Tops and Bottoms?
    Answer: This requires specialized training, but briefly:

14. Analyze historical highs/lows.

15. Study candlestick reversal patterns.

16. Consider time cycles.

17. Watch for reversal signals in key technical indicators.

18. Assess broader financial fundamentals.
    The more factors align, the higher the probability of a top/bottom, allowing cautious test positions.

19. How to Execute Entries, Exits, and Position Reductions?
    Answer: Ask yourself: Do you have a trading plan? Without one, this question is moot. A plan means prepared battles—higher win rates and controlled risks. Unplanned, random trades usually fail.

20. What Is Adding to Positions? When to Do It?
    Answer: Adding to positions means increasing size for greater profits (not averaging down—a dangerous habit that compounds errors). Only add to winning positions, typically in wave trading. Scalping doesn’t involve adding.

21. On Overleveraging, Holding Losing Positions, and Chasing Trends
    Answer:

• Overleveraging: >15% is heavy, >30% extreme, >50% reckless. It’s gambling—high risk of ruin. Even “sure wins” demand normal position sizing.

• Holding Losing Positions (No Stop-Loss): Like leaving your house unlocked—inviting disaster. A top trading taboo.

• Chasing Trends: Impulsive, planless trading (buying highs/selling lows). Our breakout system is methodical, not reckless. Another key taboo. Avoid these pitfalls.