10 essentials forex trading for newbies

as a newbie…i just want to share 10 assentials forex trading that i read from other forex blog

hese 10 Forex trading essentials are a high-level peek at the pitfalls that catch many traders. Compare your trading style with these simple fixes and if you are not employing some or all of them, you are placing yourself at a higher risk level.

  1. Increase your time perspective - If you are not a well seasoned Forex trader, you shouldn’t even look at a price chart of less than 60 minutes. The randomness of the normal transactions which occur in Forex will distort your judgment of the true picture. Use longer time frames, such as 60 minute, 4 hour and daily charts when planning your trades.

  2. Reduce your position size to 5% Maximum - Having more than 3 to 5 percent of your trading capital on the table is a major no no. High leverage makes it very easy to get in away over your head. This combination snares many traders and can rapidly destroy your account. You need to have the ability to ride the volatility waves common in Forex.

  3. Give your trade time to work - You can only use this option effectively if your position is sized safely… as per 2) above. Prices will fluctuate dramatically in Forex, and you need to be sure that a loss really is a loss before you close a trade that is moving against your plan. A 30 pip stop loss will often kick you out of a trade, just as it’s about to turn in your direction. You need to allow for larger price swings… if you have determined the major price trend, be patient and let the odds work in your favor.

  4. Reduce your dependence on technical indicators - Due to the fact that technical indicators get their data from past events, the reality is they have no ability to predict the future. Pro’s that enjoy success using these indicators, often profit from the knowledge of how the masses are likely to react to this data, rather than the information itself. You need to determine the major trend (a simple moving average will show you this) and hop aboard. Use a longer time frame, as in 1). The largest players in Forex rely about 25% on technical indicators when making their trading decisions.

  5. Trade only one or two currency pairs - And stick to the majors… not the crosses. Currency prices are driven primarily by fundamental data. In order to anticipate what is likely coming down the road, you need to follow some basic data for each of the countries involved. Trading too many currencies will make it difficult to keep up to date. There is equal opportunity to profit from each of the pairs, so wait until your experience level has matured and the information tends to sink in without as much effort on your part before you start to trade more currencies.

  6. Average in and out of your trades - If your trading account is less than $50,000 have your broker enable mini-lots for your account. This will allow you to average in and out of your trades… a great way to add more flexibility to your account. If this applies to you and your broker doesn’t offer mini lots, find a new broker… this is an important need to do.

  7. Follow the data for your currency pair(s) - Know what data is pending for release. Volatility often increases dramatically when these releases occur. The safe strategy is to exit your positions prior to major releases… this is the way many of the larger accounts handle these situations. Data releases can often cause a change to the trend. Take them seriously.

  8. Determine the trend and get aboard - As with any type of trading, the safest bet is to determine which way prices are trending, and then trade in that direction. You don’t need anything fancy… a simple moving average on your candlestick chart is sufficient. Zoom your chart out to be sure you have the big picture. Compare where the price is now, relative to where is has been for a significant amount of time (at least a month). Use caution if the current price is near upper or lower extremes, as there may be a trend change once that extreme is reached.

  9. Know when to take a profit - A winning position can quickly turn into a loser if you set your sights too high. Don’t be afraid to take your profit - or a part of your profit at 20 or 30 pips. The price waves in Forex make it ideally suited to averaging into and out of positions by using multiple entry and exit points for each position. This is exactly where your mini lots can help! The benefit of spreading out your position is that your overall risk is reduced.

  10. Stop listening to ‘Gurus’ - Don’t fall into the trap of believing everything, or even most things, you hear. The trading world is overflowing with gurus only too willing to offer their opinion on the future. It will only be an opinion, nothing more. They may seem to have convincing data, but trust your own brain. You need to weigh the economic data from your countries… that is what drives currency prices. The enormous size and nature of Forex ensure there is no insider information. You have access to the same data as everyone else in the game. In time, your own instinct will guide you to your goals, and that is what you need to trust.

adapted from : forex for newbies

There is nothing quite like the rush of excitement one gets when embarking on a new project for new currency traders it is the lure of an intellectually challenging activity that can provide a nice living that really gets the juices

While the scenario described above has many truths, the reality initially, is nowhere near what the trader envisioned. Why does the market always reverse when I get in?

Why did I hesitate and not cut that loser 30 pips ago? Maybe this frum will have better trade ideas.

These are but a few of the many questions that haunt newer traders shortly after their trading account is opened. “How can this be?” they ask, “I was a
successful accountant, doctor, programmer etc etc…”

What traders seem unable to recognize is that [B]trading is a job/profession [/B]just like any other one success does not come overnight; but rather from hard work and making simple yet effective decisions each day to improve their performance.

Enough of the sad reality; what can you do to change course?

[li]Ask yourself if your approach to FX trading is sustainable. What are the costs to you if you do not figure it out?
[/li][li]How do the top FX traders plan and execute their trades?
[/li][li]If you were one of the top FX traders, would you be really happy, excited and motivated?
[/li][li]Make a commitment TODAY to doing whatever it takes to become a top
[/li]FX trader. Your mantra should now be, “If they (the top FX traders) can do it, I can too!” It all starts with a decision and a commitment, and you need to make that TODAY.
[li]Learn and practice the skills, techniques and strategies of top FX traders. Become an intense student of your craft buy, invest, study and use all the top materials you can.
[/li][li]Lock on to the end result. What is it you really want from trading? Get crystal clear on these things.
[/li][li]If you follow these six steps, your view of FX trading will change. Tomorrow morning, you will be at your computer bright and early eager to learn and educate yourself on the art of trading. You will not fall for same old traps, as before you will be in control of your destiny as a trader.

wasn`t happygilmore that guy Adam Sadler the ice hockey player who turned to golf? :slight_smile:

this is probably one of the most important posts i’ve come across on this forum. i squirm reading other epic threads where traders are so bogged down in the minutia that they can’t see the pips for the cash. there’s no magical oscillator or stop loss protocol to help you succeed in the forex market.

#3 is extremely important: you have to be [I]in the market[/I] to win. dipping in and out on a minute chart with a 15pip stop loss will get you buried. go with the trend and give your trades room to breath.

Especially the stuff about reducing your dependence on Technical Analysis.
Anyone who read technical analysis knows that TA can predict prices if you know what you are doing. Technical Analysis for Dummies covers all the basics. Technical Analysis of the Financial Markets by Murphy is must read for anyone wishing to see how a 30 year old pro does it in various markets and will show the various techniques used to profit handsomely in any market, whether it is stock, bonds, futures or spot forex.

Technical Analysis reflects fundamentals, they reflect everything on a chart, fundamentals spell out the why of it all.

If you read something based on technical analysis, and you don’t know what it is from anything else, then you can’t properly critique anyone’s trading decision let alone your own.

Find a good Technical Analysis book then compare to what this newbie said and I dare you to agree.

can you recommended me the nice book for technical analysis?

Technical Analysis of the Financial Markets by John Murphy

and/or Technical Analysis for Dummies

They can be repetitive, however, Barbara Rockefeller is a Currency trader.

The first is a classic, so don’t trade much longer without it.

I’m very frustrated with some web sites no less that base counter trend trades on RSI or Stochastics when trending indicators show strong trends. So when I saw your thread about “Don’t rely too much on technical indicators” that put me on edge, especially after reading Murphy’s book.

They are available from Amazon.com for a pretty good discount.
I hope you benefit from those books and campaign for a more informed trader like I have just started to do.

thank for your info
but i found some info about kbc technical analysis…what do you think about it?

source: forex for newbies

may i add other essentials ?

  1. have a daily/weekly or monthly goal.
    this is very important. do not trade just to trade. let your goal be realistic and in your means.

  2. visualise your successful trade before you enter it. just sit back and visualise it, see those pips in your head !

  3. after 3 unsuccessful trades in a row take a break. the chances are, with emotions and psychology taking into consideration, that your 4th trade will also be unsuccessful. take a break. watch a movie, go for a walk, have sex, whatever

  4. do not be greedy. there are always other opportunities !

also, what is very very important and not be neglected ever:

  1. use stop-loss !

i forgot to do that today (i’m in the middle of exams >.<) and got burnt. lost the pips i made earlier this day

  1. learn to love a loss
    losing isn’t fun at all, but it will happen to you. you cannot always win. learn to deal with it, accept it and think like this when you have a loss: what, if i had done it differently could have prevented this loss ? learn from your mistakes !

that the great tips…other newbies must be appreciate that.THANKS fo sharing

But five page to learn some pieces of technical analysis versus a classic like Murphy’s book, about 600 pages, is worth it, and you will have a clue for other market’s trading opportunities.
This book is head and shoulders above most of the free web sites in information and class.

In my opinion I think trading mistakes will happen in future (we are not machines), the most importing thing is to learn from it and try not to do it again

yes. i agree with you because the world economy are not consistent.So the chance to get profit and loss are 50-50