10 Tips for Online Forex Traders
Without a doubt, trading is more than a few quick tips for success. You need experience, fortitude, capital and, above all, a solid trading system. However, for beginners and those who are perhaps losing their focus amid significant drawdowns, keeping things simple can introduce much-needed focus into your trading.
To that end, here are 10 tips for trading e-forex that can help you get a handle on these exciting markets.
- For small accounts especially ($25,000 and under), trade with the trend. Many beginners look for trades in any direction. While forex trading easily permits bi-directional trading, trading in the direction of the trend improves your odds over the long run.
- Have two accounts. One real account and the other a demo account. Learning doesn't stop when trading real dollars begins. Keep the demo account and use it to test alternative trades, alternative stops, etc. For example, you can shadow your real trades with identical ones in your demo account, but widen your stops in the demo in an effort to see if you're being too conservative.
- Stop looking for leading indicators. There aren't any. While some firms make a lot of money selling software that predicts the future, the reality is that if those products really worked, they wouldn't be giving the secret away.
- Examine daily charts, four-hour charts and one-hour charts to time your trades. While trading at 30- and 15-minute time increments is doable, it takes a great deal of dexterity.
- Don't trade the time frame. Trade the pattern. Reversal patterns, hesitation patterns and breakout patterns appear often. Learn to look for the pattern in any time frame.
- If you're properly funded, trading two lots is safer than trading one. Trading three lots is safer than two. Trading is a synthesis of emotions, technical analysis and money management. One lot makes it difficult to weigh these elements in deciding to enter or exit. Two lots is easier and, providing you have the capital, three lots is optimal.
- Extreme trading can be the most conservative trading. Trading at the extremes � when prices touch or break or bounce off trend, support or resistance lines � increases the odds that you have chosen the correct direction.
- Scan the Big Five - the dollar/yen, euro/dollar, Swiss franc/dollar, euro/yen and pound/dollar � before you decide to take a position in any one of them. There might be something obvious you're missing.
- Follow the Upside Down Rule. If you can turn a chart upside down and it looks the same, stay away.
- Don't count profits in your first 20 trades. Keep track of the percentage of wins. Once you know you can pick direction, profits can be increased with multi-plot trading and variations in using your stops. In other words, now is the time to get serious about money management.