22 Free Forex Tips from FreeForexTips.com
Free Forex Tips
This is nice tips for U who want to start learning forex. For another great forex tips, Just go to the original site ^^
Tip 1. Gamblers go to 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. Game is fun except when you are losing real money…
Tip 2. Never invest money into a real Forex account until you practice on a Forex Demo account!
Allow at least 2 month for demo trading. Consider this: 90% of beginners fail to succeed in the real money market only because of 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.
Tip 4. Always take a look at the time frame bigger than the one you’ve chosen to trade in.
It gives the bigger picture of market price movements and so helps to clearly define the trend. For example, when trading in 15 minute time frame, take a look at 1 hour chart; trading hourly would require obtaining a picture of daily, weekly price movements.
If a trend is hard to spot — choose a bigger time frame. Up and down market patterns are always present. Always make sure you know the dominant trend, unless you are a scalper. Scalpers have no need to spend their time studying big trends, what’s happening in the market here and now (during 5-10 minute time frame) should be of only importance to a Forex scalper.
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 conditions on the market, while an unsuccessful trader will blow up his account after 5-10 unprofitable trades in the row.
Even with the same trading system 2 traders can get opposite results in the long run. The difference will be again in money management approach. To introduce you to money management, let’s get one fact: losing 50% of total account requires making 100% return from the rest of money just to restore the original balance.
Tip 6. Put emotions down. Trade calm.
Don’t try to revenge after losing the 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.
Tip 7. Choose the time frame that is right for you.
Choosing wise means that you are comfortable and have time enough 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.
Tip 8. Not trading or standing aside is a position.
When in doubt — stay out. If it is not clear where the market will move — don’t trade. In this case saving present capital is and absolutely better choice than risking and losing money.
Tip 9. Learn to use protective stops. Respect them and don’t move.
Hoping that market will turn in your direction is a very delusive hope. By moving a stop loss further a trader increases his chances to end up with much bigger loss.
When holding to a losing trade too long, and even if funds permit, traders as a rule are very reluctant to accept big losses, thus often continue “hoping for best”. In the mean time invested money is stuck in the open trade for unknown period of time (weeks and even months) and cannot be used for opening new positions. Not working money — dead money. Also this will result in constant interest payments for holding open positions.
Tip 10. “Keep it simple, stupid” — applies to indicators, signals and trading strategies.
Too much information will create a controversial picture of where to trade and when not to. To avoid lots of confusion create a simple but working method of trading Forex.
Tip 11. Think about risk/reward ratio before entering each trade.
How much money can you lose in this trade? How much can you gain? Now, make a decision if the trade is worth entering.
Example: if trader is looking for possible 35 pips gain and possible 25 pips of loss, such conditions are not worth trading. Compare it with the situation when a trader has 100-120 pips of potential gain and only 10-20 pips of possible loss. This is the trade to open!
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 Thursdays.
Tip 17. Learn about Fibonacci levels and how to use them for trading.
Fibonacci can be very helpful in trading, even partially using the study, for example, to determine the best exit, can bring traders to a new edge of trading.
Tip 18. Always ensure that a signaling bar/candle on the chart is fully formed and closed before you enter a trade.
A golden rule of trading: “Always trade what you see, not what you would like to see” is the best explanation here.
Tip 19. If you ask for someone else’s advice as about how and when to trade
in other words, choose to rely on live trading signals from other traders, make sure you do it for your benefit, not for disaster. If you use such signals to discover how other traders do analysis and study on the price — you are on the right track and soon you’ll be able to do analysis yourself.
But if you’re just blindly following recommendations and your only task is to push the correct button… think again.
Tip 20. Using a highly leveraged account comes at a cost.
It will, of course, give a trader more financial gear to trade, and also trader’s broker will be happy as it will mean higher spread income for him. On the other side a trader signs up for additional risks that multiply with higher leverage in a “friendly tight” proportion.
Tip 21. Learn to measure trading success by the end of the day, week and then month and year.
Do not judge about your trading success on a single trade. To be successful traders don’t need to win every trade, they also don’t become rich in one trade — they need to be profitable in a long run.
Tip 22. There is no such thing as a secret approach to understanding the market.
Take the time to develop a solid trading system and find out that the secret to trading success lies in hard work and constant learning.
Related 22 Free Forex Tips from FreeForexTips.com
No comments yet.