Free forex trading tips for beginners as well as professionals to keep the money ball rolling and survive the forex slaughterhouse

On September 17, 2012 | By | In Forex tips

These forex trading tips for beginners (and professionals) are based on my own forex trading experience, falls and ups, during which most of my trading psychology and currency trading methods have been developed. You cannot gain them in a week’s time or even in a few months time – those hunches or forex alerts as I call them come with time, and often with bad experience which cannot be avoided in forex investment.

I always like to remind myself that you cannot avoid suffering money losses, no matter how experienced you are. It’s better to accept them and to learn from it. Why did I enter a particular trade? Why did I keep that trade so long? Why is my stop loss here and not there? Where do I place my profit target? How much of my account should I risk and why? What do I do when I am in a trade? Why is it so important to enter a trade with more than just one position? Why am I so nervous right now? Those and much more questions are going to be your entourage in your daily forex business.

So, what are the most important tips for forex trading? Well, there are many alerts and everything is more or less important here – your chosen strategy, money management, stop loss, profit taking, psychological qualities, technical and fundamental knowledge, forex indicators and signals, even the forex trading platform.

Here are some free forex trading tips and tricks I have managed to gather from my own experience:

1.    The amount of all opened forex pairs’ positions should not exceed more than 30% from your invested capital.

2.    Do not risk more than 5% of your capital per one forex trade operation.

3.    Cut your losses short and let your profits run. According to statistics even the best and most experienced forex traders can boast of only 40% of successful trades. That means, 60 % of their trades are losers. So how do they trade and stay in the currency market? Simply the proportion between the losses and profits must be at least 1/3. Sometimes you can risk 1/1, but then the number of your profitable trades must outnumber your loosing trades.

4.    Do not try to avenge the market if you have suffered a stop loss. Do not double your positions if you are on the loosing side and the trend is going against you. You might want to double your profitable positions in a trending market.

5.    Take some rest and shut down your PC if you have suffered a loss. Drink some tea, read a book, go to a movie, whatever…Do something that draws your attention from forex. Remember, everyone has some bad and good days. After your emotions have cooled, analyze your mistakes: where did you make a false movement, when and why. After your analysis wait for another opportunity to enter a forex trade.

6.    Always use stop losses and profit taking technique. You never know when some central bank will decide to make currency intervention and you will suffer margin call.
On the other hand, profit taking is always necessary to avoid greedy decisions “to wait some more”. Remember – the price can always go back, so take what you are given. It’s easier to tolerate the thought of more money that you could have made, than the thought that you did not earn anything or even suffered a loss, though had a chance to earn something.

7.    Determine your trading tactics – do you want to trade in a range (sell high and buy low according to the support and resistance levels) or use a trend trading technique (breakout of support and resistance, trading in a bigger time frame).

8.    In case of forex pair sideways movement – sell high and buy low. The price is in a range and you never know when it will break the floor or the ceiling.

9.    In case of breaking of the floor (support) or the ceiling (resistance) – follow the breakout direction.

10.    You might want to enter the trade with two or even more positions for one currency pair with different profit targets. Why? Because this way you can maximize your profits, and minimize the losses of false movements. The psychological stress is also lessened, knowing that you have already some fixed profit which is not going to evaporate in your eyes in case of correction.  First position has to be closed after 30 or 50 pips of profit, second position has to be closed after 100 or more pips of profit. In case you have more than 2 positions, you can distribute your profit targets like this: 40, 80, 100 pips and the last one until the strong, long term resistance – support point is met.

11.    Move your stop losses. If a price is going in your predicted direction – move your stops and protect your profits. After the price moves 30 – 50 or more pips in the way that you have predicted, move your stop losses to entry. This way you will defend yourself against unpredictable corrections or unfavorable news releases. You will already have some fixed profit from your first profit target.

12.    It’s better not to trade during the economical news release or at least put your stops to entry. Why? Because news release is a number one killer of technical trading patterns. Remember, it’s the economical news that drive the forex currency market and in case of shocking news the technical patterns often get disrupted. Technical patterns work because of the majority of people making the same decision at the same time, based on the same technical figures that are thought to be working based on the past price behavior.

13.    Trend is your friend. Do not trade against the trend. That’s a very important forex trading alert in my list.

14.    Plan your trade and trade your plan. Do not enter the forex market impulsively (unless you are an experienced genius trader, trading for a very long time).

15.    Always develop your trading strategy and do not completely rely on your old methods. Forex is like a virus, it always changes and evolves and so should your trading methods. I remember what it was like to trade in 2006 – 2008. Everybody could make thousands just buying GBP/JPY or AUD/JPY, because the market had been clearly moving in just one direction for about 6 years. Well, guess what? The 2008 autumn proved that nothing is everlasting, especially money markets along with your financial portfolio.

16.    Use strict money management. Do not play big – (unless you want to loose everything in a matter of days or even hours).

17.    In case of a trending forex market do not enter too many new positions alongside of your old profitable positions. New positions must not outnumber old profitable positions.

18.    Do not rely on media and other news sources. All their predictions have 50/50 probability. If they knew the truth – I don’t thing they would share it anyway, except for money market manipulation.

19.    If you have a good, profitable currency trading strategy proven in the long run – stick to it, no matter what.

20.    Do not be afraid to trade in your own way. If you are right – it doesn’t mean that everyone else is going to agree with you.

21.    Never trade different forex strategies at once in one account.

More tips on forex trading I will add in the future, until then, I hope, those will help you stay out of trouble and earn a few bucks along the way.

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