Here are ten things you must do and 10 things to avoid when formulating and executing your forex trading strategy. If you want to be successful at forex trading then read and understand the points below there essential to achieve currency trading success.
Forex Trading - 10 Essential Tips You Must Do and 10 Errors to Avoid
By [http://ezinearticles.com/?expert=Monica_Hendrix]Monica Hendrix
Here are ten things you must do and 10 things to avoid when formulating and executing your forex trading strategy. If you want to be successful at forex trading then read and understand the points below there essential to achieve currency trading success
1. Don’t day trade
It doesn’t work! All short term volatility is random so you have no chance of winning longer term.
2. Don’t buy a Currency trading system with..
A hypothetical track record.
These are done in hindsight knowing the closing prices so avoid them. In forex trading its more difficult, you have to make money going forward!
3. Don’t trade off news stories
News is discounted by the markets instantly and is impossible to trade so don’t try.
4. Don’t mix fundamentals and technical
There separate, you are either a technical or fundamental trader - you can’t combine both.
5. Don’t use scientific theories
The king of these is Elliot wave and it doesn’t work.
It’s supposed to be objective but everything about it requires subjective judgement.
If markets moved to a scientific theory we would all know the prices in advance and there would be no market!
6. Be Objective
Use objective criteria to execute trading signals. Avoid subjective theories (like Elliot wave mentioned above) or cycles, these are subjective and mean your emotions can get involved
7. Don’t chase your tail
Gets a currency trading system you are confident in and stick with it. Don’t chop and change it!
8. Don’t forget to place stops immediately
Always place it as soon as you have entered a trade. Never use a mental stop or you will be tempted to run losses.
9. Don’t have an ego
Many traders like to see that market as they want to and not as they really are. Leave you ego behind and accept the market price is the RIGHT price.
10. Don’t work to hard
Many forex traders think the more they put in the more they will get out.
While this is true in many professions, it is not true in the forex markets – you only get rewarded for being right.
Successful forex trading is all about working smart not hard.
Now ten things you must do:
1. Get a simple system you understand
Simple systems work best and you only need a few rules or indicators in it. Don’t complicate it, the more rules and the more parameters, the more likely it is to break or lose in trading.
2. Make sure you have confidence & discipline
Develop it yourself and you will get confidence that leads to discipline. If you try and follow someone else’s system you will lack both and fail.
3. Use a technical approach
Takes less time and also takes into account human psychology which moves all forex prices.
4. Be patient
Only execute your trading system in line with your trading signals and don’t be tempted to chase profits.
5. Always look for confirmation
Never hope a support or resistance level will hold, get the odds on your side by using momentum indicators to confirm first, this will dramatically increase the odds of success.
6. Ignore others
Trade in isolation and ignore others. Don’t discuss what you are doing, this will keep your emotions out of your trading.
7. Have goals & a plan
Have a realistic plan and profit goals. Sure people get rich overnight but their a minority! If you can make 50 – 100% per annum your up there with the best traders.
8. Take risks
Forget restricting risk to much, when you see an opportunity go for it and take calculated risks this is not being rash, it’s the reality of trading FX.
9. Know your edge
If you don’t know your edge i.e. why you should win at forex trading while 95% lose you don’t have one so you will be joining them!
Get the right forex education and know your edge before you begin.
10. Enjoy what you do
If you sweat about positions, feel edgy, or worry about trading it’s not for you. You should view trading as enjoyable and a challenge, if you don’t forget it and do something else.
We have expanded on all the points in our other articles so check them out.
Keep in mind forex trading is not easy very few win and most lose. The good news is, if you understand and apply the above, you could soon be making big forex profits.
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