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Trading Tips: Part One |
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1. First things first. Before getting involved in forex trading, an investor should learn the basics of forex trading. This would seem self-explanatory, but apparently it isn't, as there are many people out there who have no idea what they're doing. In order to compete in the trading business and have any success at it, an investor must be well-educated as to what it is they are actually doing. This is not to say that an investor needs to be an MBA or be a graduate from a prestigious school—but it does mean that anyone who plans to become a forex trader should read as much as they can on the subject before hand and not simply jump in with both feet.
2. Remember: forex trading is a zero sum game. That means for every long there is a short. If 80% of the traders are on the long side, then the remaining 20% are on the short side. That means the shorts have to be well capitalized and are thereby viewed as the stronger hands. The 80%, who are holding far smaller positions per trader, are considered weaker hands, since any unexpected change in prices will force them to liquidate their longs.
3. Remember: no one person is bigger than the market.
4. It is better to read the market than to react to it. It's the difference between swimming with the current and being hit by a wave.
5. It is better to trade with the trends than try to pick tops and bottoms.
6. When trading tops and bottoms, wait until the price action really confirms that a top or a bottom has been formed before taking a position in the market. Trying to identify tops and bottoms in the forex market is chancy, but being patient and waiting to make sure that a proven top or bottom has formed will increase the odds of profiting and slightly reduce the risk.
7. Have a different trading strategy for each of the three types of markets: up-trending, range bound, and down.
8. Choosing to do nothing is also a position.
9. Buy the dips during up-trends; sell bounces during downtrends.
10. When in a Bear market, never buy a dull market. When in a Bull market, never sell a dull market.
11. Up market and down market patterns are present at all times — it's just a question of which is more dominant. Select trades with the trend.
12. A sell signal that fails is a buy signal. A buy signal that fails is a sell signal.
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| Symbol |
Rate |
| GBP:CHF |
2.007608 |
| GBP:JPY |
182.222212 |
| GBP:USD |
1.757198 |
| NZD:USD |
0.658397 |
| EUR:CAD |
1.503413 |
| EUR:CHF |
1.557680 |
| EUR:GBP |
0.775889 |
| EUR:JPY |
141.384148 |
| EUR:USD |
1.363390 |
| AUD:JPY |
80.415028 |
| AUD:USD |
0.775455 |
| USD:CAD |
1.102702 |
| USD:CHF |
1.142505 |
| USD:JPY |
103.700427 |
| USD:SEK |
7.185028 |
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Disclimer: This website is for informational purposes only and is not intended to provide
specific commercial, financial, investment, accounting, tax, or legal advice.
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© ForexCenter.com, 2005, All Rights Reserved
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