This is just an addition to my blog Forex tips for Newbies. (originally posted 5/9/08)
I want to tell you some addition things I am learning as I trade Forex.
First I want to say Forex is very hard work and please respect that, and start off small and slow, if you don't, unless you are a super genius, you will be humbled very fast; and like the rest of us that got our butts handed to us, you will either learn how to trade or quit. With that said here are some additional tips. Thanks for stopping in.
Forex is not Vegas, it is not a place to gamble, it is a place that you must have skills if you are going to enjoy any measure of success.
Unlike the stock market (unless you are a seasoned pro) this is not buy and hold game in the short term. Short term price bounces and retraces often. You can lose everything if you invest in Forex like you do in the stock market unless you are a longer term trader with the capital and patience to sustain you.
This is a tough game, Trader to Trader, winner takes all, it is not personal, it's forex.
If you feel like the trade is always going against you STOP, and take a LOOK at your strategy, and learn from other taders. Don't sweat it, we all felt that way in the beginning, except for the few gifted ones.
Keep in mind that whenever you open a position it will always put you in the negative, because you have purchased the right to hold a position. So don't panic
I just want to share what I feel are some pretty safe tips. REMEMBER!!!! ALL TRADES have the potential of being losing trades: and no strategy is fool proof, sometimes you will miss it. Now with that disclaimer in mind, here we go.
Come to your platform with a plan and a clear head. If you are pissed, stressed, panicked or in any other series of negative emotions, you will lose your money to the clear thinking, well seasoned, rested, calm trading pro who is ready to eat your lunch.
Look at your price chart on a longer term chart than you trade in. Tell yourself aloud which way the major trend is running, so that you can align yourself with that trend in your thinking and trade accordingly.
Draw your trend lines, if they are not already up, so that you won't forget your trend direction when you are bombarded by the noise of the market.
If potential corrections are fundamental to your trading, draw Fibonacci lines to determine possible pivot levels.
You may also check pivot levels. The forex strategist employed by your company can usually provide these for you. Use all tools and indicators along with your common sense, because tools DON'T ALWAYS WORK!!!!!!!! I no longer use these indicators as they are lagging data, but I am really simple in my trading approach. There are super pros who ace this stuff. Just learn common sense rules to these things if you are going to use them. If you do not, you will be squashed count on it!
I never listen to the news, it usually affects my trading decisions, so I just trade what the charts tell me. If you are a short term trader, Stay out of the market during major economic news on your currencies if you can.
Wait a while after major economic news, let price settle and determine a direction before jumping aboard. Please for the sake of your capital learn all of your major economic news on the currencies you trade, and know when it is released. You don't have to listen to it, but it is wise to know when it occurs so that you can stay out of the market during that time. This is critical. Being in the market at the wrong time can break you within a matter of minutes.
IT COULD COST YOU EVERYTHING!!!!!!!!!!!!
Just know that for every trade you make, there is another trader trying to out trade, and wait you out. Try not to panic, but it gets easier with time. Also know that price never, ever goes straight up or down, because you have traders fighting at every level. This is why it is a good idea to trade small initially, and PRACTICE, DRILL AND REHEARSE on a practice account, so that you can become comfortable with the price dance.
Take note of the highs/lows on a larger time frame than you are trading, so that you have an idea what trading strategy to employ. If the market is trending down, selling the highs is usually a good safe way to make profits. It doesn't always work, some news, speech or price spike/dip in oil or other important news things could effect your trade. If the market is trending up, then you want to buy dips. Your spikes or dips usually occur around your trend lines or MA(moving averages) when you see a reversal in your candlesticks formations. Don't try to pick top/bottoms yourself, this will also get you squashed. You need valid confirmations for tops/bottoms and the more confirmations the better.
Patience is paramount. It is hard to watch the market for a while to establish the ranges, without wanting to jump right in, but if you are going to be a safe trader, it is wise; also keep a practice account so that when you can't wait, you can get that itch out of your system by trading on your on your practice account.
I also don't buy near the highs or sell near the lows. I have been there and been burned there. It is dangerous.
Then there are times when price is going like a mad freight train and all you can do is jump on-board and enjoy the ride for a minute. Jump on during corrections if you can, otherwise, unless you have a good risk appetite, wait for a less risky time to trade.
This is also critical, have another source of income while you are learning to trade Forex, because the pressure to have to earn X number of dollars to pay your rent, utilities and other major bills will cause you to make critical trading errors, and lose a substantial amount of money. If you want to learn. ****** PLEASE, start slow and find a broker who will allow you to learn with pennies instead of dollars. I still trade pennies and use my practice account.
AS ALWAYS:---- IF YOU WANT TO BE GOOD, PRACTICE, DRILL AND REHEARSE!!!!!!!
PLEASE REMEMBER THAT THE MARKET IS NEW, AND FRESH EVERYDAY, BUT HAS HISTORY IN YESTERDAY!!!!!!!!!!!!
If you have lost in Forex, especially if it is a substantial amount. Take a break to conquer those fear ghost that might be housed in your head. Start reprogramming your mind to make this work for you. If any other human being can successfully trade, you can too!
LASTLY, NEVER, EVER, EVER, EVER TRY TO PREDICT A TOP OR BOTTOM ON A TREND; THIS IS THE BEST WAY TO BECOME ROAD KILL FAST! LET OTHERS STEP IN FRONT OF THAT VEHICLE. YOU STAY SAFELY ON THE SIDELINES, UNTIL YOU HAVE A PROVEN TOP OR BOTTOM!!!!!!!!!!!!*******************
Happy trading my FRIEND!!
This is not in any way intended to be a solicitation to trade in the forex market. I am only posting this for those who decide to trade and are looking for opinions of other traders!!!!!!
Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you need for living expenses and cannot afford to lose.
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