Below are some expert trading tips for FOREX traders, courtesy of RGCX
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1.
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An old cliché but one which holds
great truth – ALWAYS trade in the direction of the trend. In the Forex
markets we see great trends in currency pairs that last for a long time
(cycles). Therefore, it pays to identify the dominant trend of currency
pairs. Going against the trend will only cost you a lot of money and
destabilise you emotionally.
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2.
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Plan your trade, trade your plan.
Trade plans can be made well in advance in the Forex market and help
eliminate emotional trading. The more mechanical you become in entering and
exiting trades, the more profitable and consistent you will become in the
long run.
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3.
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Before initiating any trade,
always know your risk and truly accept this risk. The risk is defined as the
number of pips from your entry to your stop loss.
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4.
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Always, use a stop loss after
initiating a trade. Placing a stop loss does not essentially mean that you
are expecting to experience a losing trade but will help minimize losses
against unforeseen market circumstances caused by unforeseen events such as
terrorist attacks, geopolitical events etc.
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5.
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After initiating a trade, a trader
must have clear trade management guidelines for that trade. Trade management
means that the trader knows in advance when and where he or she will move the
stop loss and when to scale out of part of the trade and eventually where to
take profits.
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6.
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Whilst trading Forex, it is
imperative for a trader to know the characteristics of the currency pairs he
or she likes to trade. A way of achieving this is by looking at the past
behaviour of the currency pairs in order to ascertain key characteristics
such as:
a) how well does the pair
trend?
b) which economic events influence
the pair?
c) what is the Average Daily Range
of the pair? etc.
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7.
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Always keep in mind that the Forex
market presents the trader with a constant stream of opportunities,
therefore, if the trader experiences more than 2-3 consecutive losses,
stopping to trade for a period of time is advisable. This will give the
trader time to refocus and examine mistakes and prepare psychologically to
re-enter the market again.
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8.
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Trade to profit and not just to
trade. Many traders think that because they might sit in front of a trade
station for a period of time it is logical that they should be trading
constantly. A trader should only initiate trades once all the odds are
stacked in his favour and he has an edge. Then and only then can trade be
initiated. Patience and discipline is an integral part of successful and
consistent trading and are traits that a trader must endeavor to possess.
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9.
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All successful traders have a
trading diary that contains all the trades good or bad they have ever
initiated. This gives traders the opportunity to constantly evaluate their
performance and rectify any identified mistakes.
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10.
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All successful traders are
constantly learning and evolving. Just when you think you know it all about
trading, a new curveball gets thrown your way. Furthermore, as time passes
by, new methods of making money are developed and need to be learned about.
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