There is no one-size-fits all solution for online forex trading. You will do your most successful online forex trading with a system that is customized to fit your needs, your style of trading and your risk comfort level. Then you need the discipline to follow your system, capital to work with and a willingness to approach each trade with energy and enthusiasm.
That being said, there are always a few things you can watch for with your online forex trading career. A few pointers that will help you steer clear of mistakes and keep you on the path to success. I`ve gathered some of these useful tips in this article. Keep them in mind for when you`re uncertain what to do, and incorporate them into your system. They will make a difference in your trades.
Online Forex Trading Tip #1 - Never add to a position that is losing. This is one of the few trade rules that you should never break. If you`re losing money on a position exit the trade, don`t add to it. This is how small losses become large losses, which leads to traders no longer trading.
Online Forex Trading Tip #2 - Always set your stop losses and decide when you will take profits before you enter a trade. Place stops that are based on market information, and not your account balance. If a "proper" stop is too expensive for you, don`t make the trade. Be sure to decide when you are going to take your profits and follow through on it. Successful traders are successful because they keep their losses small, and they take their profits often.
Online Forex Trading Tip #3 - Pay attention to the market. Exit and enter trades based on market information. Don`t wait for a price you think the currency should hit when the market has changed direction on you.
Online Forex Trading Tip #4 - There are times when, due to a lack of liquidity or excessive volatility, you should not trade at all. On a similar note, never trade when you are sick. You can`t count on yourself to be alert to the shifts of the markets, and make good decisions.
Online Forex Trading Tip #5 - Trading systems that work in an up market may not work in a down market, and a system that works for trending markets, or for range bound markets may not work in other markets. Have a system for each type of market.
Online Forex Trading Tip #6 - Up market and down market patterns are ALWAYS there, but you have to look for the dominant trends. Always select trades that move with the trends
Online Forex Trading Tip #7 - During the blow-out stage of the market, either up or down, the risk managers are usually issuing margin call position liquidation orders. They don't generally check the screen to see what`s overbought or oversold; they just keep issuing liquidation orders. Make sure you stay out of their way.
Online Forex Trading Tip #8 - Trust your instincts. If something feels wrong about a trade, don`t make it. It`s better to be superstitious than to loose money.
Online Forex Trading Tip #9 - Rumour is king. Buy when you hear the rumour, sell when you hear the news.
Online Forex Trading Tip #10 - The first and last tick are always the most expensive. Get in the market late, and out early. And never trade in the direction of a gap, either opening or closing.
Online Forex Trading Tip #11 - When everyone else is in, it's time for you to get out. If a stock or currency is overbought, it`s time to exit your position.
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