Free to Reprint Articles

This article gives several tips and unwritten rules formed by the community of Forex traders.

Trend is your friend.
The market always has a direction. It is important to understand the market’s “mood” and open most positions to the prevailing trend. There are no friends on the market for you but for the trend.

Buy dips - sell the rallies.
The first statement is more of a jocular rule. The basic market idea is to buy in the bottom and sell at the top. It is important to detect a moment for entering the market correctly, seeing the top and the bottom clearly. Beginner traders should try understanding the market tendency and build their strategy with this information. In this respect the latter statement is connected with the former ones. For be a successful trader, you need to foresee the expectations of other players at a certain point in time, rather than build an academically correct forecast of market movements.

Don’t trade by schedule. A decision has to mature.
Determine your plan beforehand.
Act with discipline.
Determining the moment to enter the market is crucial, and so is the moment to leave the trading. Don’t enter the market when the situation is unclear or the fluctuations do not fit into any expected scenario. Try to fix previously open positions, because it is during the periods of chaotic changes that loss risks are particularly high. It is a bad habit for a beginner trader to rush to his PC and start looking frantically for a tool and direction where he can open. In this case the work starts with shallow analysis and a desire to start ‘working’ right now. Serious analysis is also work, and moreover, it’s the most important work stage. Before opening a position, determine a level which you find acceptable for starting the trade. Watch the trend and enter the market when the trend looks like you expected. Sometimes you need more than one day for this. Once you have a plan and the orders are established, stick to these decisions until the position is closed. Enter the market too soon or too early, or change your orders for no good reason, and you will probably end up losing money.

Ride on profits long. Cut off losses short.
These two statements are related to a most important issue of regulating risks while trading at Forex. A beginner trader, seeing a minor profit from a position, withdraws it immediately and is reluctant to close an unprofitable position, hoping that the exchange rates will become more favorable. This is one of the main reasons for beginner losses. It is important to evaluate and advance the profits and losses, and this also holds firm for stop orders. Otherwise losses will be larger than profits in the long run. Try to be ‘hard’ about losing profitable positions and close unprofitable positions easily, as soon as the rates start moving somewhere you did not expect them to.

Limit the amounts of information.
Read only what is useful.
Don’t confuse trading with academic ideas.
One of the crucial points is determining the sources of information you’re about to base your trading operations upon. The market offers tons of info, and you need to spot those which got practical value. It is important to understand what gives you knowledge and stick to it, instead of trying to embrace all the sources out there. Not all estimations, forecasts, sources and instruments are trustworthy. You have to build an efficient trading system and follow its signals. And one more thing: actual purchase or selling is not the same thing as a market opinion, however academically grounded it can be. Some people trade, others give opinions, and in most cases these are different people.

Stay cool and calm
Don’t hurry to trade, the market will never end.
Here’s the last thing. Always control yourself. Plenty of losses occur because people just lose self-control. Mind you, ecstatic happiness because of a profitable position or total account income is just as dangerous as psychotic reactions and disheartened condition. You lost today, but you always have a chance to win tomorrow. Fixing a loss or profit, don’t try to enter the market to ‘earn more’ or ‘gain what was lost.’ Try to calm down and analyze what’s just happened. Start trading again no sooner than your emotions are stabilized.

Original article: http://blogohost.com/articles/forex-tips.html by Arnold Kligermann. Keep this link when copying the article.