When pondering which Forex trading strategies are best for you, never forget what you’re up against: the Forex market has a daily transaction volume of $5 trillion and is the most liquid market on the planet. Psychology matters: if you can’t bear the thought of going to sleep with a position still open, for example, you’re probably better advised to stick to day trading. But beyond your own preferences and aversions, if you’re interested in how to trade Forex successfully there are some basics you need to know:
If you like gambling, go to a casino, not the Forex market. If you use unproven and spontaneous actions in Forex trading, you’re likely to get fried – and fast. Study and analyse the market meticulously before you trade.
Before you start trading, practice on a Forex demo account. It takes at least two months for most people to learn the ins and outs of Forex trading. 90 percent of novices fail in the real market because they simply haven’t acquired the discipline and knowledge necessary for success. The 10 percent who make it have often been honing their skills on demo accounts for a long time before they start trading with real money.
When you’re new, make the trend your friend. Basically, don’t sell whilst the trend is up and don’t buy whilst the trend is down. Generally, it takes a lot of experience to develop the sharp skills, attentiveness and sheer nerves to trade against the trend successfully.
Whatever time frame you’ve chosen to trade with, always look at the longer frame. If you’re trading with a fifteen-minute time frame, keep your eye on the one hour charts too. If the time frame you’ve chosen is too short to identify trends, go for a bigger time frame, whilst still keeping your eye on the even bigger frame!
Avoid revenge and excitement trading. If you’ve lost or won a trade, take the time to calm down. Overreacting either way can cloud your thinking and lose you money.