1. Know yourself. Define your risk tolerance carefully. Understand your needs.
To profit in trading, you must make recognize the markets. To
recognize the markets, you must first know and recognize yourself. The
first step of gaining self-awareness is ensuring that your risk
tolerance and capital allocation to forex and trading are not excessive
or lacking. This means that you must carefully study and analyze your
own financial goals in engaging forex trading.
7. Do what you understand.
Simple as it is, failure to abide by this principle has been the doom
of countless traders. In general, if you are unsure that you know what
youre doing, and that you can defend your opinion with strength and
vigor against critics that you value and trust, do not trade. Do not
trade based on hearsay or rumors. And do not act unless you are
confident that you understand both the positive consequences, and the
adverse results that may result from opening a position.
8. Do not add to a losing position.
While this is only common sense, ignorance of the principle, or
carelessness in its employment has caused disasters to many traders in
the course of history. Nobody knows where a currency pair will be
heading during the next few hours, days, or even weeks. There are lots
of educated guesses, but no knowledge of where the price will be a short
while later. Thus, the only certain value about trading is now. Nothing
much can be said about the future. Consequently, there can be no point
in adding to a losing position, unless you love gambling. A position in
the red can be allowed to survive on its own in accordance with the
initial plan, but adding to it can never be an advisable practice.
9. Restrain your emotions.
Greed, excitement, euphoria, panic or fear should have no place in
traders calculations. Yet traders are human beings, so it is obvious
that we have to find a way of living with these emotions, while at the
same time controlling them and minimizing their effect on our lives.
That is why traders are always advised to begin with small amounts. By
reducing our risk, we can be calm enough to realize our long-term goals,
reducing the impact of emotions on our trading choices. A logical
approach, and less emotional intensity are the best forex trading tips
necessary to a successful career.
10. Take notes. Study your success and failure.
An analytical approach to trading does not begin at the fundamental
and technical analysis of price trends, or the formulation of trading
strategies. It begins at the first step taken into the career, with the
first dollar placed in an open position, and the first mistakes in
calculation and trading methods. The successful trader will keep a
diary, a journal of his trading activity where he scrutinizes his
mistakes and successes to find out what works and what does not. This is
one of the most importance forex trading tips that you will get from a
good mentor.
11. Automate your trading as much as possible.
We already noted the importance of emotional control in ensuring a
successful and profitable career. In order to minimize the role of
emotions, one of the best of courses of action would be the
automatization of trading choices and trader behavior. This is not about
using forex robots, or buying expensive technical strategies. All that
you need to do is to make sure that your responses to similar situations
and trading scenarios are themselves similar in nature. In other words,
dont improvise. Let your reactions to market events follow a studied
and tested pattern.
12. Do not rely on forex robots, wonder methods, and other snake oil products.
Surprisingly, these unproven and untested products are extremely
popular these days, generating great profits for their sellers, but
little in the way of gains for their excited and hopeful buyers. The
logical defense against such magical items is in fact easy. If the
genius creators of these tools are so smart, let them become
millionaires with the benefit of their inventions. If they have no
interest in doing as much, you should have no interest in their
creations either.
