7 Key Tips to Forex Trading
Forex Trading Tip 1
Go with the trend!
Trend is your friend.
Trade with the trend to maximize your chances to succeed. Trading against the trend won’t “kill” a trader, but will definitely require more attention, nerves and sharp skills to rich trading goals.
Forex Trading Tip 2
Gamblers go to a casino.
All unproved, spontaneous actions in Forex trading — are a part of pure gambling.
Any attempt to trade without analysis and studying the market is equal to a game. Games are fun except when you lose real money…
Use the true value in our free weekly forex analysis.
Forex Trading Tip 3
Never invest money into a real Forex account until you practise on a Forex Demo account.
Allow yourself at least 2 months for demo trading. Consider this:
90% of beginners fail to succeed in the real money market due to lack of knowledge, practice and discipline. The remaining 10 % of successful traders had been sharpening and shaping their skills on demo accounts for years before entering the real market.
A good demo account to start practising with could be, for example, FXGame from Oanda.
Forex Trading Tip 4
Never risk more than 2-3% of the total trading account.
One important difference between a successful and an unsuccessful trader is that the first is able to survive under unfavourable market conditions, while an unsuccessful trader will lose his account after 10-15 unprofitable trades in a row.
Even with the same trading system, 2 traders can get opposite results in the long run. The difference will be again in the money management approach.
A quick fact to get your mind thinking about money management: losing just 50% of your account balance requires making 100% return only to restore the original balance.
Forex Trading Tip 5
Put your emotions down! Trade calm. Don’t try to revenge after losing a trade. Don’t be greedy by adding lots of positions when winning. Overreaction blocks clear thinking and as a result, will cost you money. Overtrading can shake your money management and dramatically increase trading risks.
Forex Trading Tip 6
Choose the time frame that is right for you. Choosing wisely means that you are comfortable and have enough time to analyze the market, place and close orders etc. Some people can’t wait for hours for the price to make a move, they like action and therefore prefer smaller time frames. On the contrary, for others, 10-15 minutes is a hustle to be able to make the right decision.
Forex Trading Tip 7
Always take a look at the time frame larger than the one you’ve chosen to trade with. It gives the bigger picture of market price movements and thus helps to clearly define the trend. For example, when trading with a 15-minute time frame, take a look at 1-hour charts.
In the same way: trading with 1-hour charts would require obtaining a picture of daily, weekly price movements.
If a trend in Forex is hard to spot – choose a bigger time frame. Up and down market patterns are always present.
Make sure you know the dominant trend unless you are a scalper.
Scalpers have no need to spend their time studying large trends, instead what’s happening in the market here and now (on 1-5 minute time frame) is their main concern.