Forex Trading Tips

I know a lot of traders who are new to forex market. They often contact me asking questions or to share their experiences with forex market. As I expected lot of them face the frustrations of streak of loosing trades. Some have so many losses that they see their whole trading account get wiped out. I find that all beginner traders experience losses due to few main reasons -

1. Primarily because of poor money management. They don't have enough idea on how much to risk per trade which is one of the most important points when it comes to having profitable trades. And infact Money Management is a big topic in itself. I'll touch more on it in my next posts.

2. The other big reason is that most of new traders don't know what to focus on. They have all sort of charts opened up and they try to find a trade opportunity on every trade. Infact one of the my friends once had 14 different charts opened on the screen and she had 8 different trades opened simultaneously. There is no way she could have managed all of them. As I expected, most of them (7 trades out of the 8) ended in loss since she was mistiming opening and closing the trades.

If having multiple charts is overwehlming, I suggest such traders to focus on only 1 or 2 currency pairs at a time. EUR/USD or GBP/USD are my recommended currency pairs since their spread is low and they have high volatility.

3. No clue on how much to expect. When you open a trade, you need to have a fair understanding on how much to expect per trade. I mean it doesn't need to be an exact number, but just a ball park. Like for day traders it can be 20 pips per lot. For swing traders it can be about 60 pips per lot ..and for scalping it can be about 15 pips per lot since Scalping is all about making tiny profits and have huge number of trades per day. I know a lot of scalper friends who make more than 200 pips each day by executing almost 15-20 trades per day.

Having such idea will let you understand when to close the trade. However if you are a day trader and you start expecting 50+pips profit per lot, then you would have most of the trades end in the loss. So its always good to know what range of profits can be expected from the types of trades you place..

Now, if any of the above points reflect the difficulty you face, I would request you to take some corrective actions..may be what I recommended. Thats all in this post...