You can never have too many tips or tricks up your sleeve when you are trading. Most of the tips I’m including here are received wisdom, trading truisms that you should remember. They apply to all markets, but are particularly useful in a volatile and technical market like the FOREX
- Pay attention to the market. Exit and enter trades based on market information. Don’t wait for a price you think the currency should hit when the market has changed direction on you.
- There are times when, due to a lack of liquidity or excessive volatility, you should not trade at all. On a similar note, never trade when you are sick. You can’t count on yourself to be alert to the shifts of the markets, and make good decisions.
- Trading systems that work in an up market may not work in a down market, and a system that works for trending markets, or for range bound markets may not work in other markets. Have a system for each type of market.
- Up market and down market patterns are ALWAYS there, but you have to look for the dominant trends. Always select trades that move with the trends
- During the blowout stage of the market, either up or down, the risk managers are usually issuing margin call position liquidation orders. They don't generally check the screen to see what’s overbought or oversold; they just keep issuing liquidation orders. Make sure you stay out of their way.
- Trust your instincts. If something feels wrong about a trade, don’t make it. It’s better to be superstitious than to loose money.
- Rumour is king. Buy when you hear the rumour, sell when you hear the news.
- The first and last ticks are always the most expensive. Get in the market late, and out early. And never trade in the direction of a gap, either opening or closing.
- When everyone else is in, it's time for you to get out. If a stock or currency is overbought, it’s time to exit your position.
- Don’t worry about missing out on an opportunity to trade. There will always be another good one just around the corner. If the trade you are considering doesn’t meet all your entry signals but it seems to good to pass up, remember, you’re never going to run out of trades you can make.
- Don’t get too confident. No one can predict the market with 100% accuracy. You need to always expect the unexpected. If you become uneasy, or the market becomes choppy, exit your trades.
- Don't turn three losing trades in a row into six. When you’re off, turn off the screen, do something else. Often the best way to break a streak of consecutive loses is to not trade for a day.
- But, don't stop trading when you’re on a winning streak.
- Measure your success by the profit made in a day, not on a trade. It’s even better to measure it over two or three days. A successful trader’s goal is to make money, not to win on every trade.
- Scalpers reduce the number of variables affecting market risk by being in a position only for a few seconds. Day traders reduce market risk by being in trades for minutes. If you convert a scalp or day trade into a position trade, you probably didn’t analyze the risks of the trade properly.
- There is no secret to understanding the market. You can spend much of your valuable time and money looking for these kinds of secrets. It’s better to take the time to create a solid trading system, and realize that the secret to success is hard work.
- Never ask for someone else's opinion, they probably didn’t do as much homework as you did anyways.
- When the market is going up, say it out loud. When the market is going down, say that out loud too. You’ll be amazed at how hard it is to say what is going on right in front of you when you want it the market to be doing something else.
