3 Forex Trading Tips That Make Big Money

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forex trading tips are ten a penny. Most will lead you to the poorhouse if you are not careful. The reality is that forex trading is counter intuitive for many people. However, with these special forex trading tips you will discover the secrets some of the most successful traders have long since known. Read on to find out what most will never understand.

forex Trading Tip Number 1

Before you have even begun dreaming of buying the mansion and fancy car with your winnings you have to understand risk management. The best traders look for every reason not to trade. If you overtrade you are being too impulsive and the markets will gobble you up. If you have a forex trading system absolutely stick to it. Its no use bending the rules to create a trade you never should take.

Understand how much you will trade per forex selection. Anyone who trades big chunks of their capital is risking total ruin very quickly. Your first responsibility is to survive. When you know you can do this you can move on and prosper.

forex Trading Tip Number 2

The trend is your friend. Heard that one before? It is a lot easier swimming with the tide than against it. Quite simply the extremely successful traders of our time from Richard Donchian to Richard Dennis to Jerry Parker all understood this.

Many so called absolute return hedge funds are in fact devout trend followers. These are not your Madoff scams or LTCM blow ups. These are the perennial high achievers in the fund rankings. forex trading is a zero sum game and when there is a financial crisis it tends to be the trend followers who clean up.

Beware, trend following can be a volatile game to play so ensure you are psychologically fit and prepared to deal with prolonged drawdowns. This is a long term strategy and only those with strong discipline will survive.

forex Trading Tip Number 3

Warren Buffet fans turn away now. Buy strength. Sell Weakness. If a forex or commodity is making new highs consider buying. If a forex or commodity is making new lows consider shorting.

This goes against the established grain of buying low and selling high. The reality is that only the truly gifted and connected will ever have enough information to know when a true bargain is available. Otherwise, consider this; if a forex is making new highs it is possible that a new long term bull market is emerging. After all, a trend has to start somewhere.

If the breakout fails then take a quick small loss and wait for another opportunity. forex trading often sees many failed breaks. You can withstand a number of small losses because the eventual trend which you will be riding will cover those losses and pay handsome profits many times over.

Is any of this a secret? Not really. Many books from the likes of Michael Covel to Curtis Faith detail how successful these forex trading tips are. The difficulty is having the discipline and patience to execute your strategy. For some it is too much of an ideological leap of faith to buy new highs or sell new lows. Look around and you will notice that extraordinarily successful people tend to do extraordinary things. It might be time you did the same.

1. By: chubaiw
2. Categories How To
3. Views 45
4. Added :23-Jul-10
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