FOREX Tips (Part 2)

Tip 12

Never add positions to a losing trade. Do add positions when the trade has proven to be profitable.
Don't allow a couple of losing trades in a row become a snowball of losing trades. When it is obviously not a good day, turn the monitor off. Often not trading for one day can help to break a chain of consecutive losses. Trying to get revenge can often make things worse.

Tip 13

Let your profits run.
Let your position be open for as long as the market wishes to reward you. Of course, for this traders need a good exit strategy, otherwise they risk to give all profits back.

Running two or more open trades gives an option to close some positions earlier and keep others running for higher profits.

Tip 14

Cut your losses short.
It's better to finish unprofitable trade quickly than wait for the situation to get worse. Don't put a stop loss too far — it's your money you risk. Better calculate the best spot to enter when a potential loss would be minimized. Again: respect your stop and don't move it "cherishing hopes".

Tip 15

Trade currency pairs in respect to their active market hours.
Learn about overlapping market hours: when two markets are open and highest volume of trades is conducted.

For example, Australian and Japanese trading sessions are overlapped from 8pm to 1 am EST. At that time trader can successfully trade AUD/JPY currency pair.

Tip 16

Choose the right day to trade.
This recomendation is often wrongly taken as an optional thing, because everyone knows that Forex market is open 24 hours a day 7 days a week Yet, choosing the time to trade can make a difference between successful and hopeless trading.

It's proved and highly recommended not to trade on Mondays, when the market has recently awaken and is making first "probation steps" to form a new or confirm a current trend; and on Fridays afternoon, during the huge volume of closing trades. The best days to trade are Tuesdays, Wednesdays and Thursday.

FOREX Tips (Part 1)

Tip 1

All unproved, spontaneous actions in Forex trading
Any attempt to trade without analysis and studying the market is equal to a game. Games are fun except when you lose real money...

Tip 2

Never invest money into a real Forex account until you practice on a Forex Demo account!  

Allow 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. Those 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 practicing with could be, for example, FXGame from Oanda.

Tip 3

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

*When a trend is up you don't want to be selling

 *When a trend is down, you don't want to be buying.

Tip 4

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 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.

Tip 5

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 unfavorable 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 you account balance requires making 100% return only to restore the original balance.