How Traders Make 10% Per Month

Key Concepts

• Aussie dollar case study: Analysis of AUD/USD pair to illustrate trading strategies.
• Daily Chart: Identified key level at 0.7512.
• Hourly Chart: Noted buy stops and liquidity pools above key highs.
• 15-Minute Time Frame: Used for detailed trade setup.

Trade Setup

1. Identified Buy Stops: Located above daily chart level 0.7512.
2. Time Frames: Moved from daily to hourly, then to 15-minute, and finally to 5-minute for precision.
3. Risk Management: Framed trades to minimize risk using smaller time frames.

Trade Execution

1. Risk Reduction: Lower risk by using 15-minute setups instead of hourly.
2. Reward to Risk Ratio: Identified 3:1 reward to risk ratio, aiming for liquidity pools on 5-minute chart.
3. Trade Management: Consider taking partial profits at 3:1 reward-to-risk ratio.

Example Calculation

• Two Percent Risk: Trade with 2% risk and manage position sizing accordingly.
• Profit Taking: Take half off at 3:1 (3% gain), leave the other half to run towards higher objectives.
• Scenarios:
  • Take profit at first area (1% off at 3:1) and aim for higher liquidity pools.
  • Potential for significant gains (up to 15:1 reward to risk).

Managing Profits

• Partial Profits: Always take partials to secure gains.
• Higher Objectives: Leave some position to run for higher targets.
• Framing Trades: Use daily, weekly, and monthly levels for significant price movements.

Psychological Aspects

• Avoid Greed: Don’t aim for every pip of the potential range.
• Realistic Expectations: Accept partial success (like achieving half the potential range).
• Consistency: Focus on consistently making partial profits over time.

Practical Example

• Account Size: Assume a $1,000 account.
• Stop Loss: Example with 10-pip stop loss, achieving 3:1 reward (30 pips) gives 3% profit.
• Compounding: Consistent 3:1 trades and leaving positions to run can yield significant monthly gains (over 10%).

Summary

• Small Risks, Big Rewards: Emphasize trades with small risks for larger rewards.
• Institutional Levels: Focus on institutional levels (daily, weekly, monthly) for trade setups.
• Compounding Gains: Consistent monthly gains can lead to substantial annual returns (over 300% per year).
• Profit Management: Secure partial profits, aim for larger moves, and manage risk effectively.