1. Read Trade Forex From Home before you do anything else. It covers a bit about everything so you can find out if Forex is for you. If you open a Forex trading account and haven't read the book then end up losing a load of money, then I will tell you I told you so.
2. Which leads me on to point no.2 - BE PREPARED with all things to do with Forex trading.
3. You MUST have a stop loss policy. Even if its a mental stop loss - you must have one and be prepared to exit the trade immediately if this level is hit - no excuses!
4. A Forex trading plan/system. You MUST have one and you MUST stick to it. Practise with paper trading and then a demo account first to gain confidence and skill with this. It does take some time but you have to trust your skill, which WILL grow.
5. Trade with the trend - DO NOT trade against it. If you are waiting for a reversal pattern to form on your Forex chart, wait until you have confirmation of a change in the direction of the trend before you open a position.
6. The Forex market is rarely your friend if the trade goes against you. Cut your losses quickly (go back to point 3) and accept them as a cost of trading - nothing more, then move on, forget about them.
REMEMBER: The most successful traders are those who LOSE THE LEAST NOT MAKE THE MOST.
7. With trading the Forex, learn to sit on your hands and not trade! ALWAYS look for good quality trades - the ones with high probability of success. A day without a trade is better than a day with one trade which looses you money. If you don't like the look of the market, the charts or if the day is full of economic announcements which you know will make the market unstable, then walk away.
8. Make sure you stay in profitable trades until your exit strategy comes into effect. In this case its good to adopt a trailing stop of say 10/15 pips away from the current price level (depending on which currencies you are trading). Maximise your good Forex trades by letting them run.
9. Learn about Fibonacci levels and how to apply them to your Forex charts.
10. Keep you Forex trading plan simple. Do not have too much information on your screen - it will only confuse you and make the decision to enter/exit a trade a whole lot harder.
11. MONEY MANAGEMENT, MONEY MANAGEMENT, MONEY MANAGEMENT! Be prepared - understand it. (go back to point no.2) NEVER risk wiping out your account - it can happen.
12. Forex trading isn't an exact science. Do not set yourself false targets and associate any emotions when trading. Do not 'expect' a trade to go in your prefered direction. Trade what you see and if you are wrong then thats just how it goes - move on to the next.
Hope that helps. Let me know how your Forex trading goes!
Annabel
16 years ago
