Trade pairs, not currencies - Like every relationship, you need to know both sides. Success or failure in forex currency trading depends upon being right about both currencies and how they impact one another, not merely one.
Knowledge is Power - When starting out trading forex online, it is crucial that you simply comprehend the basics of this market if you want to take full advantage of your investments.
The main forex influencer is global news and events. For example, say an ECB statement is released on European rates of interest which typically may cause a flurry of activity. Most newcomers react violently to news like this and close their positions and subsequently lose out on the best trading opportunities by waiting until the market calms down. The potential in the forex market is in the volatility, not in the tranquility.
Unambitious trading - Many first time traders will set very tight orders in order to take really small profits. This isn't a sustainable approach because while you might be profitable in the short term (if you're lucky), you risk losing in the long term as you have to recuperate the main difference between the bid and the ask price before you make any profit and this is much more difficult whenever you make small trades than whenever you make larger ones.
Over-cautious trading - Like the trader who tries to take small incremental profits constantly, the trader who places tight stop losses having a retail forex broker is doomed. Once we stated above, you need to give your situation a fair chance to demonstrate being able to produce. If you do not place reasonable stop losses that permit your trade to do this, you will always end up undercutting yourself and losing a little bit of your deposit with every trade.
Independence - If you're new to forex, you will either decide to trade your personal money in order to possess a broker trade it for you. So far, so good. But your chance of losing increases exponentially if you either of those two things:
Interfere with what your broker does on your behalf (as his strategy may need a long gestation period);
Talk to a lot of sources - multiple input will only result in multiple losses. Take a position, ride by using it and then analyse the end result - by yourself, on your own.
Tiny margins - Margin trading is among the biggest advantages in trading forex because it enables you to trade amounts far larger than the total of your deposits. However, it is also dangerous to novice traders as it can appeal to the greed factor that destroys many forex traders. The best guideline would be to improve your leverage in line with your experience and success.
No strategy - The aim of making money is not a trading strategy. A strategy is the map for how you intend to make money. Your strategy details the approach you are going to take, which currencies you are going to trade and how you'll manage your risk. With no strategy, you may become among the 90% of new traders that lose their money.
Trading Off-Peak Hours - Professional FX traders, option traders, and hedge funds posses a huge advantage over small retail traders during off-peak hours (between 2200 CET and 1000 CET) as they possibly can hedge their positions and move them around when there is far small trade volume is certainly going through (meaning their risk is smaller). The best way forward for trading during off peak hours is straightforward - don't.
The only way is up/down - Once the market is coming up, the market obtained care of up. Once the market is heading down, the marketplace is going down. That's it. There are lots of systems which analyse past trends, but none of them that may accurately predict the near future. But if you acknowledge to yourself that all that is happening at any time is that the marketplace is simply moving, you'll be surprised about how hard it is to blame other people.
Trade on the news - Most of the really big market moves occur around news time. Trading volume is high and also the moves are significant; this means there isn't any better time for you to trade than when news is released. This is where the large players adjust their positions and prices change producing a serious currency flow.
Exiting Trades - Should you place a trade and it's not working out for you, escape. Don't compound your mistake by staying in and hoping for a reversal. If you are inside a winning trade, don't talk yourself out of the position because you're bored or wish to relieve stress; stress is a natural part of trading; get accustomed to it.
Don't trade too short-term - If you are planning to make less than 20 points profit, don't undertake the trade. Multiplication you're trading on will make the chances against you way too high.
Don't be smart - The most successful traders I understand keep their trading simple. They don't analyse all day long or research historical trends and track web logs as well as their results are excellent.
Tops and Bottoms - There are no real "bargains" in trading foreign currency. Trade within the direction the cost is certainly going in and you're results will be almost guaranteed to improve.
Ignoring the technicals- Understanding if the market is over-extended short or long is really a key indicator of price action. Spikes occur in the marketplace when it's moving all one of the ways.
Emotional Trading - Without that all-important strategy, you're trades essentially are thoughts only and system is emotions along with a very poor foundation for trading. When most of us are upset and emotional, we do not makes the wisest decisions. Don't let your emotions sway you.
Confidence - Confidence comes from successful trading. If you lose money at the start of your trading career it is extremely hard to regain it; the secret is not to go off half-cocked; discover the business before you trade. Remember, knowledge is power.