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Forex Trading Strategies: 3 Golden Rules

When you have read a few forex books or visited a few online currency trading forums, you will quickly realize that there are almost as many different forex trading strategies as there are traders. People have their own style; but more than that, in currency trading there are many different ways of making money.

So there is not one top forex system that you must follow to profit from foreign exchange trading. However, there are some guidelines that apply to the way in which you approach your trading and these are true for just about anybody. I call them the golden rules of trading.

1. Follow The Trends

Most forex trading strategies and systems focus on identifying trends and there is a good reason for that. Whether the trend shows a rise or a fall, get in to go long or short as appropriate and do not go against it. Bucking the trend will see you losing money fast.

2. Safeguard Your Funds

Risking too much on one trade has been the downfall of many a promising trader. Never risk a lot of money on a single trade, however strong your feelings may be that this one cannot go wrong. They can all go wrong.

So how much do you risk? It depends on your strategy and how much it matters to you if you lose all of your funds, but never more than 5% of your balance. 2% per trade is a safer option.

Some people maintain the percentage as their funds increase, so that they gradually risk more in real terms on each trade. That is up to you but consider carefully before you do this. When you have more money in your account, you will probably be more unhappy if it is wiped out, so you may want to keep the same position size (reducing your percentage risk) as your funds increase.

3. Set Goals For Each Trade

Have a clear profit goal for each trade, so that before you enter, you have already decided when you will take the profit and close. Do not get greedy and try to stay in there for more and more.

In the same way, if it turns bad, do not try to hold on in the hope that the market will turn back your way. Cut your losses and get out. Using stop losses to do this automatically is a very wise strategy.

Those are the first three golden rules of currency trading: the guidelines that can help you develop profitable forex trading strategies, whatever your system.

acomplia

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Monday, June 29th, 2009 Introduction No Comments

Forex Trading Forum Hints And Tips

A forex trading forum is a popular place for beginners to go when they are just getting into forex trading. There are many internet forums and you can discuss any aspect of currency trading there. But should you trust the answers that you get? Are these online discussion sites really a valuable source of information, or just a drain on your time?

Forums began in the time of the Roman empire. At that time they were a physical space in the middle of the city a little like a market place but without a market. The men of the city would meet there to hear and debate matters of importance such as politics and the law.

Since then the word has come to mean any location or group in which discussion takes place and opinions can be aired. On the internet, it has gradually taken over from the term ‘bulletin board’ which was used for the old style of sites where members could post messages. The new format of forums is much easier to navigate and people can more easily get involved in discussions than they could on bulletin boards.

This means that it is very easy to either start or join in a discussion. If you have a question you can post it and you are almost certain to see replies. For some aspects of foreign exchange trading this can be very useful.

For example if you are thinking of investing money, time or both in a forex system, ebook, robot or training program, it can be very useful to check a forex trading forum for reviews and feeback from people who have already used the product that you are considering. Use the search facility to see if there is already a thread about the product and if not, start one by asking if anyone has experience of the product. Feedback from other users can help you decide whether something would be suitable for you or not.

It is best to find several different opinions before making up your mind. Remember that one person’s opinion is only one view and you might not agree with that person. They might have been looking for something different, or they might have had unusually good or bad luck with the product. If you find a lot of different opinions it is much more helpful. You can see what kind of person has a good experience with the product and what kind of person has a bad experience.

If you have questions about trading, a currency trading forum can be useful too. But again you need to think about who is replying to your question. You might not necessarily want to trust everybody.

Sometimes different users will disagree with each other because they have different ways of making money with FX. There are many different methods and when you get conflicting advice it can be confusing. So do not be distracted by all the people who will tell you that their way is best.

It is very easy to sound like an expert in a place where nobody knows you. All a person has to do is to make a lot of posts and sound experienced. In fact a high post count often just means that the person likes hanging out in the forum and does more talking than trading. Some users may never even have traded for real at all, but only used demo accounts. Remember that you do not know who these people are. You should not automatically trust everybody’s opinion.

Finally, take care that you are not becoming an addict yourself. It is very easy to waste a lot of time following random discussions and chatting. Have a clear purpose when you enter a forex trading forum and leave when you have found what you were looking for.

green coffee

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Tuesday, June 23rd, 2009 Strategy No Comments