Forex Trading Tips - Part 4

Part 4: These forex trading tips may be of help to the budding or hardened professional trader. Knowledge is certainly power.

Welcome to part 4 of the forex trading tips series. If you haven’t read part one, two or three, please take some time to read and understand them at www.forextradinghq.com/forex-information/forex-resources. If you have - congratulations, you probably understand more then most traders gambling their savings away on the forex markets. Take notes of what I say, but it is your choice whether to follow them or not. I am simply sharing my personal experiences, so some of my ideas and opinions may not cover your overall goals in trading forex. So we shall start off to rehash the forex trading tips we covered in part 3.

In part three we discussed three major points. These three points are important, and most successful forex traders trade the markets on the basis of these trading principles. The first forex trading tip we had a look at was to trade during a peak time since that was when the most volume of forex was traded on the markets. Another point we discussed was to trade foreign exchange in the peak times only as that was when the most volume was traded – it is safer to walk with the crowd than in a quiet and lonely alleyway. Finally, we also discussed the possibility of you making profits from the volatile moves the forex market experiences when news and data releases are made public. Most of the key dates that you need to know are published on key financial websites or the company or government organisation responsible for keeping tabs of economic data figures.

Exit with style. If a trade is going sour, get out. That’s it. Get out. Don’t let your emotions or greed toy with the idea of any future possibility of the currency price recovering. Assuming you have an exit plan specifying your stop loss level, you should comfortably let yourself out of the markets at that level, no matter what second thoughts you have. Show the markets any hesitancy and the markets will slaughter you. Now, if you were on the other side of the coin – that is, if you are sitting on unrealized trading profit, don’t let boredom or stress make the exit for you. Let your plan instruct you on what you should do. Most traders would simply be stopped out, if they were following a trailing-stop strategy.

Impose a trading goal of 20 pips a trade. Question yourself – is the trade worth your while? Is it worth your time? Is it worth the risk? The answer depends on your trading plan, your dealers’ spread and your financial goals. Some traders would say, a trading goal of 10 pips profit a trade is too small – and you are risking far too much for such a little profit. In the end, it is your call, so make your calculations and see if your risk:reward ratio is well worth your while.

Keep It Simple Stupid! Some traders may succumb to implementing a great trading plan with many technical indicators showing them, when to take a trade. But sometimes, the best trades, well in truth, all of your best trades would be made from very simple principles such as support and resistance and trendlines. The lesson here is not to overanalyse a trade. Keep your trading light, keep it simple.

Want to know more? Well, there’s going to be a part 5 in this forex tips series.

George Polizogopoulos is a staff writer for ForexTradingHQ.com, the information hub for forex (foreign exchange) traders. More information about learning forex is available on our forex trading website.

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