Learning about Forex can be difficult and most of us can improve
our trading by focusing on a few items. In this article I will list 5
ways to improve regardless of whether you are new to trading or an
advanced trader.
1. Don't Over Trade - Many Forex traders do not intend to over trade. Often what happens is that the new trader learns a system with fairly large stops that are well-intentioned but when losses occur the trader's account goes down quickly. The tendency is to trade shorter and shorter time frames until the trader is scalping; meaning many more trades. There is nothing wrong with scalping but it can lead to over trading. Make certain that you have a specific reason to enter each trade and stay disciplined.
2. Focus on 1 or 2 Currencies - One of the best tips I received after trading for several years was to focus on just a few currencies. One of the reasons is that you begin to understand what the currency is most likely to do in certain situations. One of the best tips is to look at two non-correlated currencies and depending on the situation trade the one that gives you the best opportunity to succeed given the conditions.
3. Use Fewer Trading Indicators - Many traders think that the more indicators that agree, the better their trade entry. Studies show this to be untrue because indicators have no way of correlating with each other. If you have an indicator that on its own gives you a 60% success rate; adding another that has a 40% success rate does not mean you will have a 100% chance to succeed if both indicators agree. You will only have a 60% chance of succeeding. Most traders who have added many indicators to confirm their trades have learned this to be true.
4. Learn About Momentum - Momentum is what makes a currency move. Good traders learn when and where momentum is going to occur in the market and in which direction it is most likely to go. They learn to read the "conditions on the ground" so-to-speak. They anticipate the trade because they have done their research.
5. Be careful not to focus too much on technical analysis - Most traders trading Forex spend a great deal of time trying to develop the perfect technical system. That will never happen. If it does, the markets will close. Learn to read the fundamentals of the market before you trade and then use your technicals to provide a good location to enter.
Trading Forex is hard work but it can be rewarding if traders follow simple principles and concepts. Hopefully you found these to be helpful to your trading.
1. Don't Over Trade - Many Forex traders do not intend to over trade. Often what happens is that the new trader learns a system with fairly large stops that are well-intentioned but when losses occur the trader's account goes down quickly. The tendency is to trade shorter and shorter time frames until the trader is scalping; meaning many more trades. There is nothing wrong with scalping but it can lead to over trading. Make certain that you have a specific reason to enter each trade and stay disciplined.
2. Focus on 1 or 2 Currencies - One of the best tips I received after trading for several years was to focus on just a few currencies. One of the reasons is that you begin to understand what the currency is most likely to do in certain situations. One of the best tips is to look at two non-correlated currencies and depending on the situation trade the one that gives you the best opportunity to succeed given the conditions.
3. Use Fewer Trading Indicators - Many traders think that the more indicators that agree, the better their trade entry. Studies show this to be untrue because indicators have no way of correlating with each other. If you have an indicator that on its own gives you a 60% success rate; adding another that has a 40% success rate does not mean you will have a 100% chance to succeed if both indicators agree. You will only have a 60% chance of succeeding. Most traders who have added many indicators to confirm their trades have learned this to be true.
4. Learn About Momentum - Momentum is what makes a currency move. Good traders learn when and where momentum is going to occur in the market and in which direction it is most likely to go. They learn to read the "conditions on the ground" so-to-speak. They anticipate the trade because they have done their research.
5. Be careful not to focus too much on technical analysis - Most traders trading Forex spend a great deal of time trying to develop the perfect technical system. That will never happen. If it does, the markets will close. Learn to read the fundamentals of the market before you trade and then use your technicals to provide a good location to enter.
Trading Forex is hard work but it can be rewarding if traders follow simple principles and concepts. Hopefully you found these to be helpful to your trading.
Paul Dean is the owner of You Learn Forex and has worked extensively with RSI, the Relative Strength Index developing new insights with trader/programmer, David Moser.
He has written three eBooks: RSI Fundamentals: Beginning to Advanced, RSI Trading Examples Vol. 1, and RSI PRO:The Core Principles.
In addition, he has developed a successful indicator called the RSI Paint Indicator that was adapted from a standard RSI to alert traders all 4 RSI signals.
He has also created The RSI PRO Forex Trading Course and is the originator of The Dow Trade.
Visit the site to read more about trading Forex.
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He has written three eBooks: RSI Fundamentals: Beginning to Advanced, RSI Trading Examples Vol. 1, and RSI PRO:The Core Principles.
In addition, he has developed a successful indicator called the RSI Paint Indicator that was adapted from a standard RSI to alert traders all 4 RSI signals.
He has also created The RSI PRO Forex Trading Course and is the originator of The Dow Trade.
Visit the site to read more about trading Forex.
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