- Traders often fail because they don’t learn from mistakes. Keep a diary of trades to discover what works and what doesn’t.
- Setting limit orders and stop/loss orders takes emotion out of the equation and ensures trading discipline.
- Trade small amounts when you are a beginner. Grow your account balance through profits, not deposits.
- Don’t set a stop loss order too close to the opening position price. Normal market volatility can trigger it if you do.
- Don’t chase a losing position out of emotion. Stick to your trading plan and don’t throw good money after bad.
- Don’t reinvent the wheel. Study other forex traders’ strategies to see what works and what doesn’t.
- High leverage isn’t free money. Manage your money wisely and stick to low leverage. That’s what the successful pros do.
- Forex trading isn’t gambling. Look for steady profits rather than hunting a few big wins.
- Plan all your trades in detail before you make them, otherwise emotions can lead to bad decisions later on.
- Don’t hold too many open positions at the same time. Unless you automate them all, you will end up being overwhelmed.
- There isn’t a single perfect trading strategy. The most important thing is to pick one that suits your personality.
- When you are following a trend, use a trailing stop to lock in your profits.
- Some currency pairs are volatile and others are relatively stable. Choose the pairs that best suit your risk profile.
- Technical analysis is well-suited to short-term analysis, while fundamental analysis may be useful in the longer term.
- Weekends are a good time to learn from your past week’s trading and to plan for the week ahead.
- If you find yourself getting tired, angry or frustrated when trading, take a break to get yourself back under control.
- If you keep positions open for a long time, be aware of rollover charges. Some accounts charge these each day at 5 PM EST.
- Pay attention to economic calendars. Surprises in GDP and other data can move the market quickly.
- Make market analysis part of your daily routine. It’s better to make a few informed trades than many random ones.
- Successful traders study their craft. If you are a beginner, consider taking an online course to master the basics.
- When starting out, study a single currency pair. Don’t spread yourself too thin by trading multiple pairs.
- Don’t let greed turn a profit into a loss. Stick to your trading plan and don’t let emotions get in the way.
- Remember that your goal is to make long-term profits. Don’t let a single good or bad day change the way you trade.
- Not all forex trading advice is good advice. Filter your inputs carefully based on the reputation of the source.
- You can learn from other traders, so share your experiences. However, make your own decisions since it’s your money.
- Set stop/loss and limit orders to reflect your tolerance for risk. The further apart they are, the more risk there is.
- If someone has a way of doubling their money each week, then why would they tell you? Stick to proven strategies.
- Automate your trading whenever you can. This will stop your emotions from doing damage when you have an open position.
- There is no such thing as a guaranteed profit. Remember that small losses that you planned for are wins as well.
- Choose a reputable forex broker that offers you trading conditions and currency pairs that match your trading strategy.
- Boredom is no reason to open a position. Be patient and look for real trading opportunities.
- Volatility is an opportunity for both profit and loss. Converging Bollinger Bands often indicate volatility ahead.
- Don’t get overconfident when you have a big win. Stick to your trading strategy and don’t take reckless risks.
- Interest rates, employment and geopolitical events are the main factors to consider in fundamental analysis.
- Don’t go against trends unless you have the financial and mental strength to survive a long string of losses.
- You make the best trading decisions when you are healthy and rested. Get plenty of sleep and exercise.
- If you over-leverage your trades, there is a real risk that you will be forced to exit a position at the wrong time.
- Pay attention to the spread between the bid and ask. This can change and make the difference between profit and loss.
- If you start out by making simulated forex trades, remember that real trading is very different because of emotions.
- You will often find the highest trading volumes when New York opens in the morning and Europeans come back from lunch.
- Always plan your exit strategy up front. At what rate will you cash out winners, and when will you cut your losses?
- Always look at the potential downside of any trade and plan to limit your losses if the worst happens.
- When manufacturing economies such as China grow, commodity-based currencies such as CAD and AUD often rise.
- Don’t just rely on technical or fundamental analysis. Successful traders take both into account before they trade.
- Study horizontal support and resistance levels. Look for price action at these to find high-probability opportunities.
