Forex Trading Tips

The following crucial free Forex Trading Tips are good to remember in every Forex trade you make.


- Take responsibility for your capital.
- Cut your losses and let your Profits Run.
- Have a Disciplined Plan.
- Keep your trading simple.
- Do not stay with a losing trade.
- Do not overtrade.
- Take responsibility for your capital.

Fact: It is always easier for people to place their savings and funds in other peoples hands, accept the losses as its easier to blame someone else than to take responsibility of those funds themselves.
The first step as a trader is believing in yourself and your own capabilities. One of the most startling discoveries when you start trading is how many “experts” get it so wrong so often – just listen to them after funds are lost! Self confidence comes by itself when you begin to understand that with a solid background and good knowledge, discipline and a well defined trading plan that you will often outperform many expert traders.

Fact: The Forex market moves several times faster than any other market and with leverage, the rewards and losses compound many times. The best way to overcome the thought of using your own money and the volumes (Lots) you will be trading is to forget about “money” and talk in terms of points. Important: Rather than calculate your profit and losses in terms of “dollars” think in terms of gains and losses in “points”. Adopt this view very early in your trading!

When starting out trading a demo account most start-up traders normally do quits well. They trade without fear because there is no “real” money to lose. As soon as its “real” money, they suddenly find themselves trading in a manner where they miss many opportunities and accumulate many losses. Simply put they loose their nerve and give into fear or greed. Try to trade without the thought of how much money you may gain or loose. Important: Trade thinking of points, even if you are trading a demo account.

Cut your losses and let your Profits Run.

This concept is one of the most difficult to implement and is the cause of most traders going into losing trades. Stay with your original trading plan, most traders do not keep to their predetermined plan and take their profits before reaching their profit target because they feel uncomfortable sitting on a profitable position.

These same traders will easily sit on losing positions, allowing the Forex market to move against them in the hope that the market will come back. In addition, traders who have had their stops hit a few times only to see the market go back in their favour once they are out, are quick to remove stops from their trading on the belief that this will always be the case. Stops are there to be hit, and to stop you from losing more money then your predetermined plan!

If you can get 3 out of 6 trades to be profitable then you are doing well. How then do you make money with only half of your trades being winners you ask yourself? - You simply allow your profitable trades to run and make sure that you cut your losses very, very early.

Note: A good Forex trading tip and Forex trading strategy is to move your stop losses (the point the trade will be sold if it goes the wrong way) behind the trade to a level where a pull back can be accommodated but a reversal will lock in at least some profit.

Have a Disciplined Plan

Trade with a disciplined Plan. The problem with many traders is that they take shopping more seriously then trading. The average shopper would not spend $1000.00 without serious research and examination of the product he is about to purchase, yet the average trader would make a trade that could easily cost him $1000.00 based on little more than “gut” feeling. Ensure that you have a plan in place before you start trading. The plan must include stop and limit levels for the trade, as your analysis should include the expected downside as well as the expected upside.

Keep your Trading simple

It is important to keep your trading simple. Many traders start out with a simple strategy that is successful but find themselves chopping and changing trying to find a better system. They allow themselves to be influenced by others opinions and too much fundamentals. Many traders who have done this have been surprised that their kids can actually trade well, consistently and often with spectacular results.

The lesson is that they don’t stray from the rules and are not influenced by other sources like the media or fundamentals. Many Forex traders pay no attention to fundamentals at all and trade quite successfully. The rule here is to keep it simple, don’t allow yourself to become confused with too much information and if you’re not sure or not in the right emotional frame of mind, don’t trade the Forex!

Do not stay with a losing trade

The reason trading with a plan is so important, is because most objective analysis is done before the trade is actually executed. Once a trader is in a position they tend to analyze the market differently in the “hope” that the market will move in a profitable direction rather than objectively looking at the changing factors that may have turned against your original analysis. This is especially true of losses. Traders with a losing position tend to marry their position, which causes them to disregard the fact that all tading signals point towards continued losses. Don’t take more trades in the hope that the market will turn in your favour; it will only accelerate your losses.

Do not over trade!

One of the most common trading mistakes that traders make is leveraging their account too high by trading much larger sizes than their account should prudently trade. Leverage is a double-edged sword. Just because one lot (100,000 units) of currency only requires $1000 as a minimum margin deposit, it does not mean that a trader with $5000 in his account should be able to trade 5 lots. One lot is $100,000 and should be treated as a $100,000 investment and not the $1000 put up as margin.

Most forex traders analyze the charts correctly and place sensible trades, yet they tend to over leverage themselves. As a consequence of this, they are often forced to exit a position at the wrong time. A good rule of thumb is to trade with 1-10 leverage or never use more than 5% of your account at any given time. Trading currencies is not for everyone go here to see if you will be a good trader.