subject: Win Forex Trading With The Following Recommendations [print this page] Tip 1. Develop a trading strategy or adopt an existing one and make sure it works on historical FOREX data. And before you ensure it works on your life account with mini-lots, you should first make sure that it will work on a demo account. After that, you can trade with your regular FOREX lot sizes. However, trading can only be beneficial for a long time if it has a proven strategy.
Tip 2. Always think about the current trend when you trade. It depends on the time frame that you are trading in; it could either be daily, monthly or global trend. Sometimes you can also observe that it could also be flat especially during the summer months. Just open positions in the direction of the trend if the market is in a trend. And if you observe that it is flat, you may consider trading in both directions within the channel.
Tip 3. Before opening your position, take into consideration the larger time frame. Important levels, previous extremum and the direction the market is moving towards on the global scale are the significant factors that you should also check when you are trading. You may also observe that frequently volatility is extremely high at important levels, where you can find the lowest certainty. If you trade intraday, check the daily time frame to make sure you do not trade against the monthly trend.
Tip 4. In finding the best entry and exit points, you may use a smaller time frame. Take advantage of M15 charts to find the best entry and exit points once you trade on H1 charts. If you are trading on daily charts, go with H1 charts in order to find the best entry and exit points.
Tip 5. You should also know how to manage your risks. Consider that loosing your deposit would mean that you are out of the trading business. This is why you shouldn't risk beyond 5% of your deposit in every trade under any situations. I suggest in my FOREX tips that you risk even less. You would like to go with 2-3% to be safe.
Tip 6. Learn to manage your emotions. Watch for fear and greed and follow your trading system no matter what. You start to lose your money when you start opening and closing positions based on what you feel and not based on what your system tells you. Your trading will be more chaotic as you lose more money, and as a result you will lose even more of your money. Same thing will also occur in case that you win too many trades in a single row. You start feeling yourself like a "God", lose your mind, and start ignoring your system, which usually leads to big losses. Whether you win or lose, you should always stay calm. You are still good if you lose a single trade or various trades in a row. After losing trades you usually get winning trades, which compensate your losses, and the opposite is also true.
Tip 7. It would be better if your trading strategy complements your lifestyle and personality. If you can trade only a few hours a day, choose a strategy that is based on delayed orders, and use larger time frames such as daily and monthly time frames. In case that you don't want to wait for big market movements, you may prefer to use smaller time frame, such as M5 or M15. Scalping strategy might suit you best. In case that you need hours or even days in creating decision, you may want to trade long-term and use larger time frames.
Tip 8. Refrain from trading if you are in doubt, or when the markets are uncertain. "Neutral position" is what we call on a position that stays away and is not trading. Avoiding losses and preparing to take a big win once the uncertainty is over and a new trend emerges are the great things that you may enjoy by not trading.
Tip 9. You may want to use protective stop-loss orders or hedging if you wish to limit your losses. Opening a position in a wrong direction will lead your stop-loss order or hedging order to kick in saving your deposit. In case that you mistakenly open a position in a wrong position, your stop-loss or hedging will kick in saving your deposit. Its not so bad after you lose a single trade and shrink your deposit a bit. But if you don't use preventive stop-losses, your stop-loss in your entire deposit. Do you really want to risk your workhorse just for the sake of a single transaction?
Tip 10. Before accepting a trade signal, check if Profit/Loss ratio of the trade is at least 2:1. You forecast profit and loss targets when you forecast a price movement. Divide projected profit in pips by projected loss in pips, and you will get this ratio. If what you will get is a number less than 2, then you do not want to enter the market. History proves the truth that it is less possible for traders to forecast price movements with greater probability than 60%. For this reason, we could conclude that the only way to stay profitable over the long term is to choose P/L ratio of at least 2:1.
Tip 11. If your trade is losing, do not add any positions in it. Just in case the market is about to turn around and then you desperately want to add more positions to your losing trade at a "better price", you will lose more money than you have originally planned.
