There are so many fundamental forex trading tips that you will be aware of and try and take on board when you begin forex trading.
In this short article, we have included the following seven pointers that may be of value for your future trading endeavours if you are a beginner. Remember, many new traders go on to make a good income from their forex trading activities and so why should you not be one of them!
1. Your trading style should reflect your personality
It would help if you found a profitable forex trading style that suits you and your personality. It can range from scalping to the other end of the spectrum, where you position trade, holding trades for longer to follow a trend.
2. Never over trade
Only trade in amounts and frequency that you are comfortable with until you are completely confident with your ability to trade Forex. If you over trade, emotion rather than logic will start to rule your decisions.
3. Let a winning trade run
For profitable forex trading, once you have a winning trade, always let the trade and profits run. It’s essential to move your stop loss up as the market moves in your direction to protect your profit but let the trade run. Allow the market to decide when the trade is over.
4. Cut your losses quickly and accept them
Never move a stop loss on a losing forex trade. Once the trade goes against you, stick to your guns and keep rigidly to your original stop loss allowing you to get out of the trade and minimize your losses. It will ensure a profitable, forex trading career.
5. The trend is your friend
Some traders use contrarian strategies, but one of the best forex trading tips is the old saying – the trend is your friend. Effectively, once you have identified the direction of the market, always trade with the trend. Never get emotionally involved with any trade by trying to out-guess the market.
6. Always keep to the rules
An inexperienced trader will feel tested to the limit in times of high volatility. When the spot moves rapidly, losses can occur if a trader does not stick rigidly to their trading strategy. It includes
- Always having a tight stop-loss
- Trade with no more than 1% to 3% of your capital account
- Never revenge trade following a loss
7. Keep a trading journal
A trading journal is essential to gauge your trading performances. The best traders are those that keep detailed records of trades. A journal can get a review at any time. If completed correctly, it will provide notes of emotions you felt when undertaking a trade. It will also flag up trades that are inconsistent with your overall trading strategy.
For further forex tips please read this additional guide that we have written that will hopefully help you to trade profitably.
Written by Chris Gillie
Chris Gillie is the founder of Axcess FX, a forex software review and research website. He is a former investment banker who worked in FX Sales on the UBS London trading floor. Chris has been using forex trading software as part of his trading set-up since the late 2000s and the embryonic days of MetaTrader and the MQL coding language.