SOME ESSENTIAL TIPS ON AVOIDING PITFALLS IN FOREX TRADING

This details how you can start earning more money from your forex trading.

Taking it like a man
It would be some display of cowardice and stupidity when one chooses to ride a loss. It requires some guts to deal with your loss and wait for another chance to try again. When you stick to a bad position, it can ruin you as a trader. The behaviour of themarket can be illogical and hence one should not be committed to a particular trade. One good trade does not guarantee a trading success. It is the constant performance in months and years that turns one into a successful trader.

Concentration
Dreaming about potentialearnings and then spending it before it is realized is bad.  Your concentration is to be on the present position and to reasonably minimize loss as at when you trade. The market and every other thing are out of your control.

No Reliance on Demos
Demo trading usually teaches beginning traders bad habits that can be detrimental in the long run. These bad habits arise because traders play with virtual money. It is better to understand the broker's system and then trade little by little only risking what you can afford to lose.

Maintain Strategy
If you made money on a well-planned strategic trade, do not lose most of it on a fancy the next time you trade. Maintain your strategy and on your next trade invest proceeds that suit your future goals.

Trade Now
Most good traders focus on the short-term trend rather than what might happen in the future time. It is better to focus on the present as the market might likely move too fast for anyone to consider the long-term. This is not to say that long-term trends are not important, but it might not be helpful in intraday trading.

 

The Hints Are In the Specifics

 

Bottom line account does not depict the full story. There are losses to be analyzed as well as losing streaks. It is traders that make money with little or no daily losses that are likely to have apositive performance in the future.
SimulatedOutcomes 
Be cautious of ‘black box’ systems. These systems most times fail to explain the manner the trade signals they generate are made. They only show atrack record of unusual historical results. To predict future trade scenarios is more complicated. These systems with their high-speed algorithm provide importantreflective trading systems but not the ones that enable an effective future trade.

 

Understand one cross at a time 

Every currency pair in the market place moves in a unique way. The forces that affect the upward and downward movement of this pair are singular to each cross. One should study them and garner experience that can be applied to one cross at a time.

Risk/Reward 

Play the market odds.
For a 20 point stop and a 50 point gain, one’s chance of winning is likely 1-3 against them. Depending on the spread traded on, it can be 1-4.

 Wrong Motives for Trading
Avoid trading when bored, unconvinced or responding to a whim. It could be that there is no trade to make in the first place that’s why you are bored or unsure.

The Right Broker
So many forex brokers are in the business just to make money from traders.

Zen Trade

Taking a position in the market should not stop one from thinking as they would have if they haven’t taken one. That detachment is important to maintain clarity and avoid the trap of emotional impulses. Hence, the chances of incurring a loss are minimized. This requires a calm approach and trading in short periods.

Willpower
Make a trade, stick to it and allow it run its course. Allow your stop loss to trigger when it should. Avoid changing mind midway through a trade life as the move might go against you. Your willpower should be seen when you have got it wrong, then pull out.

Temporary Moving Average Crossovers
This scenario is one of the most unsafe for amateur traders. The average price of a short run can equal that of a long run when short-term moving average crosses that of the long-term.

 

Stochastic

This is yet another unsafe scenario. When it initially shows the signs of an exhausted condition, it is when the big spike in the ‘exhausted’ currency cross seems to happen. It is better to buy with the initial signal of an overbought cross and then sell in the first signal of an oversold one.

With this method, you are up-to-date with the trend having recognized an optimistic move that still has more or less way to go. Let’s say K and D percentage are both crossing 80, therefore buy! The same can be done on the sell side, there you sell at 20.

One Cross Is What Matters

Let’s say theEUR/USD trade is high, you then decide to buy GBP/USD because there is yet to be any movement.  This is a risky move. It is better to concentrate on one cross at a time. If you are convinced about EUR/USD, then just buy it.

 

So Bullish

Statistics drawn from trade reveals that majority of traders will flop at some point. Trying to be too bullish in your trade aptitude can be detrimental to your long term success. The learning experience is never ending irrespective of your current success in the market. Modesty, being open to new ideas and limiting the bad habits are key to long-term trading success.

Self-Interpretation of Forex News

Be able to interpret the source documents of forex news and events. Avoid reliance on the interpretation of others and the news media.