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This article has some practical recommendations and rules which will help you to understand how to work with Forex.

Trend is your friend.
Do not play against the market. The market always has a certain direction of the movement. It is important to understand “the mood” of the market and to open the majority positions to the side of the prevailing trend. You have no friends on the market except the trend.

Buy dips, sell the rallies.
This phrase sounds jocular a bit. But the fundamental essence of the market is that you should buy down and sell up. It is important to determine the correct moment of the entry into the market — where is down and where is up. For a beginning trader it is necessary not try to determine the up and down of the current tendency, but to understand the dominating mood of the market correctly and to create your game proceeding from that. If you want to have a successful game on the market you should predict the expectations of its participants at the concrete moment.

Do not trade according to timetable. Determine your actions beforehand. Be disciplined.
One of the most important moments in the trade is to determine the moment when you should entry into the market and when you should leave it. If you do not understand the current situation clearly do not start trading. Before you start trading take time to analyse the situation on the market, this is very important. Before you open a position you have to determine the level preferable for the beginning of the trade. Watch after the development of the trend and start the trade only if the trend coincides with your expectations. Sometimes it takes several days.

The quantity of information should be limited. Do not read much, read useful information. Do mix trade with academic views.
One of the most important things for a trader is to find the sources of information. There is a lot of information, and you must find the sources which can be used in arranging deals. It is important to determine what to use and what to read to understand the market; and do not hurry looking for the information. You have to create an effective trade system and to follow its signals. And one more thing the trade is not the same with the academic opinion about the market. Some people trade and some people reason about the trade, and these people are different usually.

Stay calm and composed. The market will never end so do not hurry.
You must always stay calm. A lot of people lose because they are out of self-control. If you have lost today, you will always be able to win. Fixing a loss or good profit do not try to start trading again in order to “earn more” or to “win back” You should cool down first and to think of the results and only after that and with a “cold” head start trading again.

It is vital to gather as much knowledge about Forex as possible. Because this knowledge will help you not to lose much money on Forex trading or Forex investment.

Surely not a single piece of knowledge can be a 100% guarantee against losses, especially on Forex, but sometimes even one Forex books can save you much money.

Wednesday, June 30th, 2010 at 11:05 am
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