Forex Tips - Part 1 of 3 Do you want to be successful Forex Trader? I'm sure you do. The Road to become successful Forex Trader is simple but not easy. Like everything in life you have to learn certain skills in order to do things right. You didn't just sit in a car and started driving, you didn't get into the pool and started swimming, someone always helped you in the beginning. Well, same rules apply in Forex Market. You just have to learn Forex! This three-part report clearly and simply details essential tips on how to avoid typical mistakes and start making more money in your forex trading. Trade pairs, not currencies - Like any relationship, you have to know both sides. Success or failure in forex trading depends upon being right about both currencies and how they impact one another, not just one. Knowledge is Power - When starting out trading forex online, it is essential that you understand the basics of this market if you want to make the most of your investments. The main forex influencer is global news and events. For example, say an ECB statement is released on European interest rates which typically will cause a flurry of activity. Most newcomers react violently to news like this and close their positions and subsequently miss out on some of the best trading opportunities by waiting until the market calms down. The potential in the forex market is in the volatility, not in its tranquility. Understand that prices move by trends. Forex has a popular saying, "The trend is your friend." there are certain movements that have been studied over many years in order to identify a pattern in the trend. These trends need to be understood in order to understand a good trading strategy. For small accounts that are $25,000 and under, trading with a trend may help improving your odds when compared to bi-directional trading. Most newbie's will look to trade in any direction, when they should be trading with a trend. Unambitious trading - Many new traders will place very tight orders in order to take very small profits. This is not a sustainable approach because although you may be profitable in the short run (if you are lucky), you risk losing in the longer term as you have to recover the difference between the bid and the ask price before you can make any profit and this is much more difficult when you make small trades than when you make larger ones. Before you take any position, look over the top five currencies to make sure you're not missing something. The top five foreign in forex are: USD/Yen, Swiss franc/USD, Euro/Yen, Euro/USD and Pound/USD. Over-cautious trading - Like the trader who tries to take small incremental profits all the time, the trader who places tight stop losses with a retail forex broker is doomed. As we stated above, you have to give your position a fair chance to demonstrate its ability to produce. If you don't place reasonable stop losses that allow your trade to do so, you will always end up undercutting yourself and losing a small piece of your deposit with every trade. There is no one strategy that will work for all the traders, each individual trader will need to develop their own approach to the market. While some traders may relay solely on technical analysis, others may prefer a more fundamental approach, while the more successful traders use a combination of both. Each individual trader will need to learn the best approach for them selves in order to gain a more comprehensive overview of the forex market in order to prepare for any entry and exit points. Independence - If you are new to forex, you will either decide to trade your own money or to have a broker trade it for you. So far, so good. But your risk of losing increases exponentially if you either of these two things: Interfere with what your broker is doing on your behalf (as his strategy might require a long gestation period); Seek advice from too many sources - multiple input will only result in multiple losses. Take a position, ride with it and then analyse the outcome - by yourself, for yourself. Tiny margins - Margin trading is one of the biggest advantages in trading forex as it allows you to trade amounts far larger than the total of your deposits. However, it can also be dangerous to novice traders as it can appeal to the greed factor that destroys many forex traders. The best guideline is to increase your leverage in line with your experience and success. Letting your emotions rule your decisions can hurt your trading in several different ways. It's the reason that most experienced traders tell novice traders that they need to develop a system and stick to it no matter what. The system tells you when to buy, what to buy, when to trade and what to trade for. By sticking to your system even when you want to fly in the face of accumulated data, you'll maximize your profits. No strategy - The aim of making money is not a trading strategy. A strategy is your map for how you plan to make money. Your strategy details the approach you are going to take, which currencies you are going to trade and how you will manage your risk. Without a strategy, you may become one of the 90% of new traders that lose their money. Trading Off-Peak Hours - Professional FX traders, option traders, and hedge funds posses a huge advantage over small retail traders during off-peak hours (between 2200 CET and 1000 CET) as they can hedge their positions and move them around when there is far small trade volume is going through (meaning their risk is smaller). The best advice for trading during off peak hours is simple - don't.
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