If you have been trading currency for some time and have yet to see any success in your trading, the chances are you do not know something that those successful traders know.
I personally struggled with forex trading during my first three months of trading and things only changed when I Realised the importance of some of the factors below and started to make adjustments to my trading style.
Here are the basics currency trading you must know:
1) Always Trade With The Trend: There is nothing more important than knowing this. In fact, you may have heard people saying that the trend is your friend and I totally agree with it. When I first started trading currency, I often trade against the trend and find myself in the red when I am stopped out. If you take some time to look at the chart regardless of what currency pair you are trading with, you will find that price move faster and higher in the direction of the trend and move slower and lesser when it is against the trend. . Therefore the chance of you making money against the trend is very low
2) Always Do Pre Trade Analysis: There is no way you are going to make money if you do not know the current situation of the currency pair you are trading. I always make it a habit to do a pre trade analysis for the pair Sun that I know the trend, Whether the price is oversold or overbought now and take note of major support and resistance level. . With all these information on hand, you will be able to setup your trading plan and then trade with your plan successfully
3) Always Be patient: This has to do with the discipline of the trader. Almost all successful traders are well discipline and are able to trade according to their plan and not emotion. There will be time where you will find yourself itching to trigger the entry button even when there is no setup that fits your trading plan and these trades usually leads to losses. There are also times where you will find yourself wanting to enter a trade before a trendline break hoping to grave a few more pips of profit but ended up with a loss when the price did not break the trendline but instead get repelled by it.
4) Never add positions to a Losing Trade: Some traders really like the idea of ??averaging and they Tend to enter into a position more losing trade hoping that the price will eventually reverse. . This is worst if you are trading against the trend as price will trend well in currency trading
5) Never Trade When You Do Not Have Time or Sick: Currency trading requires time and attention to read the chart. If you do not have the time to go through the chart properly, you should not place a trade on the day. . This is the same if you are sick on that day and unable to give full attention to trading
6) Give Yourself a Break: When you are in a losing streak finding yourself losing consecutive trades, you should immediately stop trading for the day. This is because the consecutive losses will prompt you to become more emotionally and trade outside your trading plan Which will then add more losses to your account. . Take note that the best trader wants to have some quiet days with consecutive losses
7) Always Trade With High Risk Reward Ratio: This is how the successful traders manage their trade. You should always aim for high risk reward ratio trades as this is how successful trader makes money even when they have a 50-50 winning ratio. Imagine you always trade with a stop loss of 20 pips and you only take the profit when it reaches 60 pips, 5 wins and 5 losses will quietly gives you a profit of 200 pips. Therefore you should always aim for a risk reward ratio of at least 2: 1
These are the seven currency trading basics that eventually allowed me to trade currency for a living and quit my day job. Spend some time to go over them and make sure you stick to it when you are trading.
id=?article-resource?> and a full time Forex trader. His blog offers simple yet powerful forex trading advice to help other traders make their 20 pips a day. You can also grave a free copy of his forex tips report that . many traders find very useful in their tradeshttp://EzineArticles.com/?expert=Kelvin_Dee
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