Ten Important Forex Trading Tips

[forex4love]

1. Do not trade forex if you have to make money. Emotions have a strong impact on forex trading and if someone has to make money, he will have more emotions than someone who likes to make more money, but doesn’t have to. If someone is desperate to make some money to pay his bills and mortgage, he loses money in forex, because he trades when there is no sharp and confirmed signal. You can become a full time forex trader and you can trade forex for a living later when you learn it properly and completely. At the beginning, you should have another source of income that covers all your expenses, otherwise forex will not have any good result for you.

 

2. Do not compete with the other traders. Any trader has a different trading style and strategy and so traders pip and money results are different from each other. While someone doesn’t like to take more than 2% risk in his trades and he is happy with a 5-10% profit every month, another trader may like to take a 20% risk and he likes to double his account every month. It takes a while until a new trader finds his own style and when he does, he should never even ask how much the other traders make. Trading is like walking on a tight rope. You lose your balance and fall down if you try to walk faster than what you can.

 

3. Trade the signals not the trades! After having a few successful trades and growing your capital, you may think that you can take a little more risk and also take the signals that don’t look good and strong enough. Then you will lose all you had made in your good trades. Whatever that your previous trades are, winning or losing, it doesn’t matter. You should forget them. You should only focus on the signals that form in front of your eyes. Do not risk more than usual, both in lot size and in signal quality, just because you have been successful in the past few days and you have more money in your account. You can lose all the profits you have made in a few minutes.

 

4. Break your rules and you get burned. If you have become a disciplined trader after so many months or years of practicing and learning, you should keep in your mind that if you break any of your trading rules, you will be in trouble and you will lose again. Forex market doesn’t know you. It doesn’t know if you are a new trader or you have been trading for several years. If you make a mistake, you lose. No matter how experienced you are. Here are some of my trading rules that make me lose (or lose more) whenever I break them:

 

* Moving the stop loss: Each position should have a reasonable stop loss. Let your stop loss to be triggered. It is there to take care of your capital. Do not move your stop loss when it is about to be triggered. I lost more whenever I did it.

* A tighter or wider stop loss: As I said, each position should have a reasonable stop loss. A tighter or a wider stop loss means bigger or more frequent losing trades. Whenever I broke my stop loss setting rules, I lost more.

* I lose whenever I take a position that has no strong and sharp signal. When any of my system rules are not met and I take a position, that position will be a losing position.

 

5. In forex trading, over-confidence is more dangerous than having no confidence. Someone who has no confidence, doesn’t do anything. There is an advantage in it. He doesn’t lose any money. But someone who becomes over-confident after a few successful trades, will blow up his account in one trade. A few good trades don’t mean that you are a professional and advanced trader. Like a few bad trades that don’t mean that you are a bad trader. Over-confidence is something that you will experience several times while you are still learning. You will learn to recognize this dangerous emotion after having some losses promoted and motivated by it. Anytime that over-confidence causes you to lose, you lose your confidence and feel more fear. If you don’t give up and keep on practicing, you will gain your confidence again, but you will become over-confident because you forget the problems it made for you the last time. So you lose again. And this cycle may be repeated for several times until you learn to recognize and control your emotions. Of course if you do not totally give up during this up and down. Monitoring your behaviors, emotions and thoughts help you to pass this stage sooner and easier. It is the most important stage in forex trading and most people give up at this stage. Those who come to a balance will become profitable traders. They are not over-confident and so they do not ignore any of their trading rules and they analyze the market properly and precisely to find the best trade setups. At the same time, they have no fear because they are confident enough. This is the balance.

 

6. There is nothing more important than experience in forex trading. Sometimes you see a trade setup, but your experience tells you not to enter. This experience can be gained through practicing. There is no magic formula in forex trading that can be given to you and make you a profitable trader overnight. It takes time and needs practice.

 

7. Do not take any position just because someone else has the same position. Novice traders are used to exaggerate about their success and hide their failure. Whenever they make a good trade, they talk about it with a lot of excitement, but they are not used to talk about their losing trades. This may make you think that some people are the best traders of the world and so when they say they are long or short, you take the same position just because they have the same position. This will not make any money for you, nor makes you a trader. A professional and profitable trader is humble, because he knows that Forex market breaks the bones of a bold and stubborn trader who knows himself as the best trader of the world. Market is stronger than all of us. Nobody can defeat it.

 

8. Do not try so many systems. I takes your whole life and you are still trying. Some people have a researching spirit. There is nothing wrong with it. It is even very good. But when it comes to Forex trading, researching spirit does not let you make money, because it causes you to spend all your time and your life to try and compare different systems and methods. After a while of trying, a rational beginner will come to this conclusion that the secret is not in trading system. The secret is in discipline and controlling of the emotions. So he stops trying, chooses a suitable system and starts making money through it. Whereas other beginners keep on testing, trying and comparing and will finally give up after wasting a lot of time and money.

 

9. Keep it simple. A Forex trading system does not have to be complicated to work. In contrast, simple systems have better results.

 

10. Take a break every now and then. You do not have to work hard to make money through Forex. In contrast, spending too much time in front of the computer and trying to take all the movements will make your mind and body too tired and then the chain reaction of bad positions will be triggered. You can not force the Forex market to work for you. It will not. As I said earlier, it does not know you and it has no mercy for you. YOU have to take care of yourself and your capital. Forex market does not do it for yo