Key Currency Trading Tips

There are some key currency trading tips that any, non-momentum following trader should master. These tips are about not getting fooled by market volatility.

Some Key Currency Trading Tips For Wise Traders

There are various currency trading tips, which often defy common sense. Some of the most valuable tips are about stop placement, and entry points. Most forex training courses teach the wrong concept, that one should use tight stops, and often place them near yesterday’s high or low. Real life trading has shown time and again that this is wrong. The fact is, you should never place stops near yesterday’s high or low, because the forex market has a tendency to sweep through those levels before making new moves. Another tip focuses on choosing entry points, and that you must take into account time zones before making any trade, expected to generate more than 30 pips. Most currencies tend to make their move in one particular time zone, for example during the Tokyo trading session only or during the New York trading session only. Opening the right trade, during the wrong time zone means that time goes on and on, the market doesn’t move, and there is a possibility for the trade to be stopped out if a tight stop is used. Foreign currency trading requires getting at least some basic tips, good tips, and taking them slightly further in one’s trading. Stop placement alone is a huge part of profitable trading, and most trading advice out there deals with stop placement in the most inefficient way imaginable. This is because all new traders want to hear about minimum risk and maximum reward. But that’s not the real word markets work, the markets act in a very intimidating way, and the tight stop theory turns into high risk trading where it becomes impossible to ride the market.

More Currency Trading Tips

other currency trading tips focus on handling open trades, such as trades that do not seem to be making progress. A good idea, that some day traders use, is to close all open trades within around 20 to 30 minutes should they fail to show even marginal profit. This is based on the belief that the probability of success tends to diminish exponentially as time goes on. So the longer a trade goes on, without showing even some profit, the less and less likely it becomes that it will end up making a profit at all during the day. Judging open trades in the first 20 to 30 minutes is a good tip, that helps day traders close bad trades, before they even have the time to become big losers. There is no strict rule for profitable trades, but usually traders have targets set on the market, and they get out at the right time. Finally, is a good idea to also use large stops, and even 100 pip stops even though the profit target may only be 30 or 40 pips. The probability for a profitable trade increases dramatically this way, even thought the risk-reward metric seems to make no sense. But the risk-reward theory is nonsensical and very poorly defined in itself, so much so that only naive traders believe in it. These are only few good tips in order to learn forex trading seriously and realistically, because most popular advice is actually wrong.