One very lucrative and desirable Forex Strategy is to create circumstances whereby you are trading risk-free. For example, assume your trading strategy has identified that the EURUSD is creating a top and looks poised to fully retract.
As such, you then proceed to short the pair and are alerted soon afterwards that a 50 pip profit has been achieved. At that point, you decide not to withdraw your gain but, instead, move your trailing stop to the breakeven point. From this time onwards, you will now be in the envious position of being able to trade risk free as long as your position remains active.
However, performing such a maneuver is quite a fine art because you could be quickly stopped-out should your trade immediately turn against you. In these cases, you could lose your original early gain of 50 pips. However, by considering the larger picture, you must realise that by using such a strategy you will be placing yourself in positions whereby you could achieve considerable profits at minimum risk to your account.
To implement and then optimize this strategy, you will first need to design or obtain a Forex Trading Strategy that you can operate over a significant period of time. This action will ensure that you trade using a consistent set of rules applied with a good money management strategy backed by sound psychology.
Applying a healthy psychology is very important when you are attempting to implement a risk-free strategy. This is because you are then more likely to make important trading decisions with consistency, confidence and discipline. Adhering to your strategy is much more difficult if you do not have sufficient trust in it over the long haul.
For instance, many traders suffer such a drop in confidence after experiencing a bout of failures, they are then no longer able to trade consistently for any length of time afterwards. With each subsequent negative result, their natural impulse to avoid any further pain increases causing their faith in their trading ability to constantly wane. Fears, doubts and anxiety run rampant under these circumstances making consistent risk-free trading nearly impossible to perform.
One of the most recommended methods used to defend against the very debilitating experience of failure, is develop a trading system that you can use consistently and confidently as explained above. Once this goal is realised, your experience and ability to identifying trading patterns will greatly increase. Consequently, although some of your risk-free trades may suffer early stop-outs, you should be able to achieve a larger quantity that result in substantial profits.