FastPips.com Presents: 13 Quick Tips for Forex Trading Success
At FastPips.com our goal is simple. We want to help you learn how to create a
profitable trading business by executing lowrisk, highreward trades in the best
market conditions possible.
#13: Back‐test, but be logical. Back‐testing a given strategy can prove priceless when
done correctly, but remember to take the results with a grain of salt. Be especially wary
of trade results shown on websites claiming astronomical gains since most of these
results simply are not attainable under live market conditions for many reasons.
#12: Always analyze similar pairs in the forex market before placing any trade. Similar
pairs can be defined as any tradable currency pair containing 1 of the 2 currencies you
are about to trade. For example, by looking at no less than 4 US Dollar pairs before
trading, one can determine if the pair will be moving based mostly on the US Dollar or
the opposing currency. This can easily be done with the Japanese Yen and others as
well. Here is an example of a chart containing 4 US Dollar pairs; it is easy to see which
opposing currencies are weakest or strongest vs. the US Dollar from this view. If
market sentiment has not changed, I would short the AUDUSD or NZDUSD, or go long
EURUSD based on my overall bias of the USD.
#11: Be wary of trade ideas coming from other individuals or groups in the many
online trading forums, blogs, or chat rooms. Only evaluate trade recommendations
from trusted parties who have a proven track record of success. Remember this is your
business, and to have a consistently profitable business, you need to execute
reproducible trades based on your own strategies and ideals. Don’t build your house on
sandy soil; lay a good foundation of continuing education and the rewards will come
many times over.
#10: Longer‐term charts (ie. monthly, weekly, daily) have logarithmically more
importance upon technical analysis than shorter‐term charts (ie. 1 minute, 5 minute, 15
minute). For example, a support or resistance level on a daily chart will hold much
more importance than a similar line than a 5 minute chart. Most reputable traders will
recommend trading on longer term charts, especially for those who are new to trading
or have limited time to trade due to other commitments. Find your comfort zone and
stick with it until you become consistent; even a slight edge in this market can set you
free financially.
#9: Do not use any trading robots, expert advisors, or other “black box” automated
trading software until you learn how to trade on your own first. Educating yourself is
the key to success; deep roots will equal a tall tree that can weather any storm.
#8: Trade with a friend, group, partner, or mentor when you begin your journey of
learning the forex market. Many of the glamorous ideologies of forex traders showered
in riches come from high‐risk, difficult to reproduce strategies. The way to often
become most profitable in this market is to have consistency, be disciplined, and to
repeat this over and over and over again. Forex trading, done properly, is not intended
to be flashy.
#7: Be sure to use a forex broker with great service and support, along with low
spreads. With the recent regulations we are much more protected against possible
broker‐related issues, but many traders are still paying much higher spreads than
average when placing trades. Do your research on forex brokers to analyze not only the
safe, financially sound companies, but also those that allow the lowest fees. Paying the
bid/ask spread in the forex market is just one of the costs of doing business, but with
the extreme level of competition in today’s marketplace there is no need to accept
paying even 1 pip more than you should elsewhere.
#6: Have a backup power supply and internet access available at all times when you are
trading. This can be as simple as a battery‐powered laptop with a wireless access card.
Don’t rely solely on the phone number of your broker as if there is a company‐related
trading issue; their lines will likely be slammed busy. Bottom line: be sure to have some
redundancy incorporated into your trading plan; treat this like a true business and it
will reward you like one.
#5: Break your trade order into 2 or 3 smaller orders to give yourself more control,
both actual and psychological. As most forex brokers do not charge commissions to
trade this market, they earn their fees through the bid/ask spread; you have no extra
cost of placing 3 small orders rather than 1 single large one. Doing this allows you to
place tighter stops on some orders, while adjusting the profit taking on others. Closing
part of an order will give the same effect, but by having a few live at the same time, it is
easier psychologically to set them and let them run.
#4: Trading profit comes from 1/3 psychology, 1/3 money management, and 1/3
trading strategy. It’s easy to get caught up in the “next best thing” or the potential of
finding a “holy grail” system, but remember that most of your profits come from
learning the things that are not quite as exciting. Trading psychology and money
management are critical to any success in the forex market; without them you will be
grouped with the 95% of those who lose their capital time and time again. Money
management is the key to unleashing potential for compounding profits; it is an
absolute necessity to learn. Do your research on the most highly coveted trading
psychology texts and dig in ASAP.
#3: Be aware of world news releases. Even if you prefer to not trade news events, be
certain to know when the major events are planned to take place. As a second line of
asset protection to your business, a good live news feed is also recommended when you
are trading. Knowing what is going on in the world is one of the most critical keys to
forex trading success; without this knowledge, your chances of success are limited.
#2: Always use a well planned stop loss when placing any trade and never, ever, move it
further from your entry point for any reason. Although it is a simple rule to put on
paper, it’s often difficult to follow…always follow this rule.
#1: Always trade any new strategy in a demo account before going live in a real money
account. Many traders simply become gamblers by placing trades live without the
proper testing and education necessary to place the odds in their favor. It is also all too
common for traders to have excellent results in a demo account or with paper trading,
then lose all their capital once they go live in a real money account. Be realistic and
treat your demo trades as real funds; that is the only way for a demo account to work
over time. If you begin to have a winning pattern in the demo account, be 100% certain
to follow all the rules exactly in your live account. Often, a good transition is to begin
with a demo account, then go to a live mini or micro account where very little capital is
risked before trading your regular sized account. Many times one can make the
transition in trading psychology from demo to live when taking the added step of
testing the proven system by trading very small lot sizes first.
Although these few trading “nuggets” are only the tip of the iceberg, I hope that they can
pique your interest enough to warrant further research and attention. I wish you the
best in your trading!
Jason Gospodarek, OD
FastPips.com
Jason@fastpips.com
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