FOREX TRADING TIPS
If in doubt, stay out: If you're unsure about a trade and find you're hesitating, stay on the sidelines.
Time your trade: You can be right about a potential market movement but be too early or too late when you enter the trade. Timing considerations are twofold, an expected market figure like CPI, retail sales or a federal reserve decision can consolidate a movement that's already underway. Timing your Forex Trade move means knowing what's expected and taking into account all considerations before trading. Technical analysis can help you identify when and at what price a move may occur.
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| Identify the state of the FOREX market: What is the market doing? Is it trending upwards, downwards, is it in a trading range.
Is the trend strong or weak, did it begin long ago or does it look like a new trend that's forming. Getting a clear picture of the market situation is laying the groundwork for a successful trade.
Determine what time frame you're trading on: Many traders get in the market without thinking when they would like to get out, after all the goal is to make money. This is true but when trading, one must extrapolate in his mind's eye the movement that one expects to happen. Within this extrapolation, resides a price evolution during a certain period of time.
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Trade logical transaction sizes: Margin trading allows the FOREX market trader a very large amount of leverage, trading at full margin capacity can make for some very large profits or losses on an account.
Scaling your trades so that you may re-enter the market or make transactions on other currencies is generally wiser. In short, don't trade amounts that can potentially wipe you out and don't put all your eggs in one basket. We offer the same rates regardless of transaction sizes so a customer has nothing to lose by starting small.
Gauge market sentiment: Market sentiment is what most of the market is perceived to be feeling about the market and therefore what it is doing or will do. This is basically about trend. You may have heard the term 'the trend is your friend', this basically means that if you're in the right direction with a strong trend you will make successful trades. This of course is very simplistic, a trend is capable of reversal at any time. Technical and fundamental data can indicate however if the trend has begun long ago and if it is strong or weak.
Market expectation: Market expectation relates to what most people are expecting as far as upcoming news is concerned. If people are expecting an interest rate to rise and it does, then there usually will not be much of a movement because the information will already have been 'discounted' by the market, alternatively if the adverse happens, markets will usually react violently.
Tip! Another thing to keep in mind is that the currencies market is constantly changing, so your FOREX currency trading system must be able to change, as well. Rates of exchange are affected by many things the successful trader must be able to keep an eye on these things, somehow.
Use what other Currency Traders use:
In a perfect world, every currency trader would be looking at a 14 day RSI and making trading decisions based on that. If that was the case, when RSI would go under the 30 level, everyone would buy and by consequence the price would rise. Needless to say, the world is not perfect and not all market participants follow the same technical indicators, draw the same trend lines and identify the same support and resistance levels.
The great diversity of opinions and techniques used translates directly into currency price diversity. Traders however have a tendency to use a limited variety of technical tools. The most common are 9 and 14 day RSI, obvious trend lines and support levels, fibonnacci retracement, MACD and 9, 20 and 40 day exponential moving averages.
The closer you get to what most traders are looking at, the more precise your estimations will be. The reason for this is simple arithmetic, larger numbers of buyers than sellers at a certain price will move the market up from that price and vice-versa.
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